According to JP Morgan Chase & Co. strategists, stock markets are flashing a bullish signal amid tentative signs that inflation volatility is peaking. Analysts continue to point out a strong correlation between bitcoin and ethereum and the equities market.
This implies that cryptocurrencies have moved in tandem with US equities this year, meaning that on days when stocks rise, cryptocurrencies tend to advance as well, and vice versa. Both asset classes have been reacting to changes in Federal Reserve policy. The central bank has been raising interest rates to temper growth and dampen inflation.
JPMorgan strategists, including Mislav Matejka, reiterated their bullish view on stocks, saying “the fundamental risk-reward for equities is likely improving as we approach the second half of the year”, Bloomberg reported.
If the correlation between equities and cryptocurrencies is well sustained into the second half of the year, then this might imply a positive outlook for cryptocurrencies.
At the time of publication, Bitcoin was trading marginally down at $30,113. A handful of alternative cryptocurrencies, otherwise referred to as “altcoins,” were trading likewise in the red. However, cryptocurrencies such as Chainlink (LINK, + 4.26%), VeChain (VET, +5.53%), Helium (HNT, +10.02%), and Metal (MTL, + 14.15%) were higher in the last 24 hours.
JPMorgan Chase stated in a recent research report that bitcoin’s recent decline has left the digital token significantly below its fair price, providing it with a “significant upside” currently.
The bank stated bitcoin was undervalued by 28% and set a price target of $38,000 for the currency. Bitcoin plummeted to lows of $25,401 for the first time since December 2020 earlier this month, while stock markets were also battered – mostly owing to inflation fears.
“The recent crypto market correction looks more like capitulation relative to last January/February, and going forward, we see upside for Bitcoin and crypto markets more generally,” J.P. Morgan strategist Nikolaos Panigirtzoglou wrote.
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