JP Morgan Says S&P 500 Could Rise Over 10% Today, Also Bitcoin?
Today and tomorrow are probably the most important days of the year for the Bitcoin and crypto market. Today’s release of the consumer price index (CPI) will possibly be the key for the coming weeks and months.
At 8:30 AM ET, the CPI for November will be released. Tomorrow, Wednesday at 2:00 PM ET, the Federal Open Market Committee (FOMC) will announce its interest rate decision for December.
Then, Federal Reserve Chairman Jerome Powell will address the press at 2:30 p.m. and give the rationale for the decision and the updated forecast for inflation and interest rates (point plot).
If the CPI comes in better than expected today, there will likely be a rally for risk assets like Bitcoin. If the CPI comes in below expectations or even rises, it could mean a rude awakening for BTC investors – at least this seems to be the market consensus.
Expectations for today’s CPI are 0.4% lower than last month, when it came in at 7.7%. As a result, the projected CPI is 7.3%.
JPMorgan outlines possible scenarios
Meanwhile, banking giant JPMorgan published an analysis that CPI inflation below 6.9% could trigger a massive rally in traditional trading markets.
Given Bitcoin’s correlation with USD markets and especially the S&P 500, this could likely have a favorable impact on the BCT price. In total, JPMorgan has mentioned six possible scenarios.
The most likely and expected outcome with a 50% chance is a Y/Y CPI between 7.2% and 7.4%. This will lead to a modest recovery in the traditional markets, according to JPMorgan, and will likely have a positive impact on the Bitcoin and crypto markets.
But as the market is heavily dependent on expectations, it remains to be seen whether the majority of market participants have not already priced this in.
As the second most likely scenario with a probability of 25%, JPMorgan considers a CPI between 7.5% and 7.7%, which would mean only a small drop or stagnation in inflation.
According to the banking giant, this would cause the S&P 500 to plunge massively, by 2.5% to 3.5%.
The Bullish Scenarios for Bitcoin
Furthermore, JPMorgan assigns a 15% probability to the bullish scenario of CPI landing at 7.0% to 7.2%, which could mean a 4% to 5% rally for the S&P 500.
JP MORGAN HAS SHARED 6 POSSIBLE SCENARIOS HERE ARE THEM ALL.
THE MOST LIKELY AND EXPECTED CHOICE IS Y/Y CPI TO COME IN BETWEEN 7.2% AND 7.4% pic.twitter.com/speetTM55h
— GURGAVIN (@gurgavin) 12 December 2022
The banking giant gives the most bullish scenario, a CPI of 6.9% or below, just a 5% chance. But then the S&P 500 could see a legendary rally of 8% to 10%. Since Bitcoin is the higher beta, this could mean double digit gains for Bitcoin.
At press time, BTC investors apparently remained on the sidelines awaiting the CPI announcement. BTC stood at $17,168.
