As the Fed stepped up its bets on inflation and dismissed discussions of any monetary policy softening. JPMorgan chief global strategist David Kelly has some advice for crypto investors watching where the market is headed. The best way to position right now is to focus on valuation and avoid looking at short-term directions.
“The economy is in recession with one foot and the other foot is now on banana peels. Make sure you overweight U.S. and international value, and stocks with relatively low P/E ratios. “
Kelly: Selling Bitcoin and Cryptocurrencies
Traditional and Crypto markets since the beginning of the year Both have fallen sharply since 2008, due to concerns about tightening monetary policy to curb inflation, which has reached its highest level in 40 years. As a result, the economy is slowly slipping into recession.
Bitcoin briefly dipped below $20,000 for the first time since mid-July as risk appetite waned after Powell emphasized in his latest speech that interest rates may have to stay high to curb inflation. According to Kelly, investors should now steer clear of big tech stocks, bitcoin and cryptocurrencies. He expects more volatility and a high risk of recession.
Having said that, the strategist believes the economy will become more normal by the end of next year. Kelly also added that “the Fed has overestimated the strength of the U.S. economy because it feels guilty about the fact that inflation is rising under their watch.”
Risk assets continue to struggle
Many experts believe risk assets will continue to struggle as Powell tackles inflation with restrictive monetary policy. The aggressive approach could also trigger an economic slowdown, Edward Moya, senior market analyst at Oanda, said in a recent email.
He has repeatedly reiterated that the Fed will tighten policy to reduce inflation. Risk assets are struggling as Powell’s fight against inflation will continue to be positive, even if it triggers an economic slowdown. “
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