JPMorgan has pushed back against one of the market’s most widely held assumptions, arguing that the Federal Reserve’s next move is more likely to be a rate hike than a cut. Citing the bank’s view, Reuters reported that JPMorgan expects the Fed to keep rates in a 3.5%-3.75% target range this year and then deliver a 25-basis-point increase in the third quarter of 2027.
That outlook stands in sharp contrast to current market positioning. CME fed funds futures indicate that traders are still pricing in two 25-basis-point cuts this year. Many crypto analysts have also leaned toward a more dovish scenario, arguing that lower borrowing costs would support broader risk appetite across financial markets. Bitcoin, often treated as a highly liquidity-sensitive asset, tends to react strongly to changing expectations around monetary policy.
Crypto bulls are still looking for a policy pivot
Lukman Otunuga, senior market analyst at FXTM, said bitcoin could recover in 2026 despite a difficult 2025. In his view, lower rates and a decline in active supply could help support prices. At the same time, many bullish crypto investors expect the next Fed chair to adopt a more dovish stance than current Chair Jerome Powell, reinforcing hopes for an eventual easing cycle.
Yields and labor data complicate the outlook
JPMorgan’s hawkish call also fits with broader concerns about Treasury yields. Earlier market analysis suggested the U.S. 10-year Treasury yield could climb toward 6% over the coming year or so, compared with around 4.18% now. If long-term yields keep rising, valuation pressure on risk assets, including cryptocurrencies, could intensify.
Still, the bank did not fully rule out cuts later this year. JPMorgan said the Fed could ease if the labor market weakens again in the coming months or if inflation falls materially. Its base case, however, remains that the labor market will tighten by the second quarter and that disinflation will proceed only gradually.
Other Wall Street banks have also revised their forecasts after the latest U.S. jobs report showed the December unemployment rate fell to 4.4%. Goldman Sachs and Barclays now expect cuts later than previously projected, shifting from earlier expectations of March and June reductions. For crypto markets, the widening disagreement over the Fed’s path is likely to remain a major force shaping sentiment, liquidity expectations, and bitcoin price direction.