JPMorgan Strategist Advises Investors to Sell Bitcoin, Crypto After Fed’s Hawkish Stance

With the US central bank bracing against inflation and rejecting talk of any easing of monetary policy. JPMorgan’s global chief strategist, David Kelly, has made some suggestions for crypto investors who are worried about the direction of the market.

In an interview Friday after Fed Chair Jerome Powell’s speech in Jackson Hole, Wyoming, Kelly said the best way to be positioned now is to focus on valuations and avoid looking at short-term direction.

“The economy has got one foot into a recession and the other on the banana peel now. Make sure you overweight US and international stocks, as well as stocks with relatively low price-to-earnings ratios.”

Kelly: Sell Bitcoin and Crypto

Traditional, as well as the crypto market, have seen big falls since the beginning of the year due to fears of tighter monetary policy to stop inflation that has reached the highest levels in forty years. As a result, the economy is slowly being dragged into recession.

After Powell stressed that interest rates may need to stay high to reduce inflation in his latest speech, Bitcoin briefly dipped below $20,000 for the first time since mid-July as risk appetite faltered. According to Kelly, investors should now steer clear of large tech stocks, Bitcoin and crypto in general. He expects more volatility and a high risk of recession.

That said, the strategist believes the economy will feel more normal by the end of next year. Kelly also added that “the Federal Reserve overestimates the strength of the US economy as it feels guilty about the fact that inflation went up under their watch.”

Risk-on assets to continue to struggle

Many experts believe that risky assets will continue to struggle as Powell tackles inflation with a restrictive monetary policy. Edward Moya, senior market analyst at Oanda, said in a recent email that this aggressive approach could also trigger an economic downturn.

“Bitcoin weakened after Fed Chair Powell missed his reiteration that the Fed will tighten policy to bring down inflation. Risky assets struggle as Powell’s fight against inflation will remain aggressive even if it will trigger an economic slowdown.”