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JPMorgan Chase CEO Hints at Four 0.25% Rate Hikes, Here's What It Means for Crypto

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Tue, 01/11/2022 - 13:10
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Arman Shirinyan
JPMorgan Chase CEO believes that a series of rate hikes will change the economy as we have known it for the last 13 years
JPMorgan Chase CEO Hints at Four 0.25% Rate Hikes, Here's What It Means for Crypto
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According to Walter Bloomberg's Twitter account, JPMorgan Chase CEO Jamie Dimon has stated that the four 0.25% key interest rate increases would change the shape of the U.S. economy. Previously, the hint from the Fed about the rate increase in March crashed both the stock and digital assets markets.

What does a rate hike bring to the economy and market?

The key rate is one of the main tools of strengthening a country's monetary policy and national currency, which creates more pleasurable conditions for foreign investors that push the economy by buying government bonds and a country's citizens, who are more likely to deposit their funds in banks rather than in the stock market.

Previously, the U.S. practiced quantitative easing, a form of monetary policy in which the central bank incentivizes lending and investment by purchasing long-term securities on the open market.

Financial experts note that quantitative easing was one of the main fuels of an almost 13-year bullrun on the U.S. stock market.

How does a high key rate affect the crypto market?

In addition to incentivizing investment in national currencies, high key rates create conditions in which traders are more likely to invest in risk-off assets like commodities and precious metals rather than risky assets like crypto.

Related
Bitcoin and Ethereum Whales Remain Cautious as Exchange Inflows Stay at All-Time Low

Previously, U.Today covered one of the main reasons behind the Bitcoin and cryptocurrency market drop that was also reflected on the stock market. Both crashes happened after the Fed allowed a key rate hike in March of this year.

At the same time, Jamie Dimon, BlackRock and JPMorgan strategists have stated that the market is currently oversold and that we might see a short-term rebound.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.