Recent increases in geopolitical risks and their potential impact on inflation are causing expectations about monetary policy to be reconsidered.

Inflation Concerns Back on the Agenda! Rate Cut Cancelled?

Ongoing conflicts between the US and Iran have reignited discussions about inflation risks in global markets. Possible effects on energy prices and global supply chains are strengthening concerns that price pressures could increase.

These developments may lead the FED to adopt a more cautious stance on interest rate policy. Analysts note that if geopolitical risks create upward pressure on inflation, monetary policy could remain tighter.

JPMorgan: The Rate Cut Cycle May Have Ended

According to a report in South Korea-based Maeil Business Newspaper, JPMorgan has updated its expectations regarding the FED’s interest rate policy. Based on evaluations included in a report published by the New York office of the Bank of Korea, the bank believes that the US rate-cutting cycle may have ended in December.

JPMorgan had previously raised the possibility of limited rate cuts in 2026. However, following recent developments, the bank now states that it does not expect any rate cuts this year.

Interest Rates Expected to Remain Unchanged

According to the new projection shared by the bank, the FED’s policy rate is expected to remain steady in the 3.5% to 3.75% range throughout 2026. JPMorgan believes there is a possibility that inflation will remain above the FED’s target level in the foreseeable future.

For this reason, a rapid easing of monetary policy is not anticipated. On the contrary, if inflation remains persistently high, a different policy path could come into focus.

Rate Hike Scenario for 2027

Another striking point in JPMorgan’s assessment is the potential for a future rate increase. The bank forecasts that the FED’s next move could be a rate hike in 2027, potentially pushing the policy rate back up to the 4% level.

This scenario indicates that a prolonged tight policy stance could continue.

Differing Expectations in the Market

Meanwhile, there are also varying views in financial markets regarding the FED’s interest rate path. While institutions such as Citi and TD Cowen expect three rate cuts this year, Barclays, Bank of America, Goldman Sachs, Morgan Stanley, Nomura, and Wells Fargo forecast two rate cuts. Deutsche Bank believes there could be only a single rate cut during the year.

These differing forecasts show that uncertainties in the global economy and the inflation outlook remain contentious in terms of their impact on monetary policy. Data and economic indicators to be released by the FED in the coming period will play a critical role in determining the direction of interest rate policy.

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The primary driver behind this pronounced bearish stance on the dollar appears to be growing concern over the U.S. labor market. Investors increasingly believe that potential weakness in employment data could pressure the Federal Reserve into cutting interest rates. Expectations of monetary easing have, in turn, fueled broader dollar pessimism.

Bitcoin and the Dollar: A Historically Inverse Relationship

Since its inception, Bitcoin has generally exhibited an inverse correlation with the U.S. Dollar Index (DXY). When the dollar weakens, Bitcoin has often strengthened; when the dollar appreciates, risk assets—including cryptocurrencies—tend to face headwinds.

There are two core explanations for this pattern. First, Bitcoin is priced in dollars, so a weaker dollar effectively makes the asset relatively more attractive. Second, a strong dollar typically tightens global financial conditions, weighing on higher-risk assets.

Viewed through this traditional lens, record bearish positioning against the dollar could be interpreted as a tailwind for Bitcoin.

A Changing Correlation Dynamic

However, recent market behavior complicates the narrative. Since the beginning of 2025, Bitcoin and the dollar have displayed an unusual positive correlation. While the DXY declined by more than 9% last year and is down roughly 1% this year, Bitcoin has not benefited. Instead, it has fallen 6% over 2025 overall, with losses reaching approximately 21% year-to-date.

The 90-day correlation coefficient has climbed to 0,60, marking its highest level since April 2025. This shift suggests that the conventional inverse relationship may no longer be reliable in the current macro environment.

If this positive correlation persists, further dollar weakness could have the opposite of its typical effect, potentially weighing on Bitcoin rather than supporting it.

Volatility Risks and the Short Squeeze Scenario

At the same time, extreme short positioning in the dollar raises the risk of a sharp reversal. A sudden rebound in the dollar could trigger a short squeeze, forcing investors to rapidly cover positions and driving the currency higher. In such a scenario, Bitcoin could move upward alongside the dollar, reflecting the current correlation structure.

With dollar sentiment stretched to historic extremes, volatility risks are elevated. Bitcoin’s trajectory will depend not only on the direction of the dollar, but also on how this evolving correlation dynamic unfolds.

This content is not investment advice.

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A Striking Statement from the Bank of America CEO

Speaking to analysts during the company’s earnings call on Wednesday, Brian Moynihan drew attention to a study conducted by the U.S. Treasury Department. According to this study, if Congress does not restrict interest-bearing stablecoins, up to $6 trillion in bank deposits could flow into stablecoins. This amount represents approximately 30–35% of total deposits held by U.S. commercial banks. Moynihan emphasized that a shift of this magnitude would directly affect banks’ ability to extend credit.

According to Moynihan, stablecoin models resemble money market funds. Stablecoin reserves are typically held in short-term U.S. Treasury securities rather than being channeled into bank lending. This causes funds to remain outside the traditional banking system. Such a scenario could put pressure on both bank profitability and the financing provided to the real economy.

Senate Bill and the Interest Debate

At the center of these concerns is a crypto market structure draft released on January 9 by Senate Banking Committee Chairman Tim Scott. The draft includes provisions that prohibit paying passive interest or yield simply for holding stablecoins. However, it does not take a completely restrictive approach. Exceptions are allowed for rewards earned through activities such as staking, liquidity provision, or collateral-based mechanisms. This creates a clear distinction between “interest on idle balances” and “activity-based returns.”

Negotiations around the bill have been marked by intense lobbying efforts. The submission of more than 70 proposed amendments ahead of the committee’s review clearly highlights the conflict of interests between the banking and crypto sectors. Amid these debates, Coinbase CEO Brian Armstrong announced that they withdrew their support, stating that the draft could effectively eliminate stablecoin rewards. According to Armstrong, the current text could suppress innovation in the sector.

Assessment

Bank of America’s warning shows that stablecoin regulations will directly affect not only the crypto market but also the traditional banking system. While interest-bearing stablecoins have the potential to weaken banks’ deposit bases, regulatory efforts in the Senate aim to limit this impact. In the coming period, stablecoin legislation will be a key determinant for both financial stability and the future of the crypto sector.

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Through this system, BNY Mellon clients will be able to invest in money market funds whose ownership records are maintained on Goldman’s private blockchain. The platform isn’t limited to these two financial giants — asset management powerhouses like BlackRock, Fidelity Investments, and Federated Hermes are also involved. Additionally, Goldman Sachs and BNY Mellon will onboard their own asset management divisions into the system.

Tokenized Funds: A New Era in Institutional Finance

Unlike typical stablecoins, which primarily serve as digital representations of fiat currencies, these tokenized funds generate yield. This makes them particularly appealing to hedge funds, pension funds, and large institutional players looking for secure yet profitable alternatives to idle cash.

According to Laide Majiyagbe, BNY Mellon’s Head of Global Liquidity and Collateral, this development eliminates several friction points in today’s financial markets. By leveraging blockchain technology, transactions become faster and more efficient. Perhaps even more importantly, tokenized assets can be transferred between financial entities without needing to be liquidated into cash — a feature that could reshape how institutional capital flows.

Transforming a $7.1 Trillion Market

The money market fund industry currently stands at a staggering $7.1 trillion. By introducing blockchain-backed infrastructure into this massive market, Goldman Sachs and BNY Mellon aim to modernize the way institutions manage liquidity and deploy capital. This transformation isn’t just technological — it aligns with a broader regulatory trend that favors digital assets.

Just recently, the GENIUS Act was passed in the U.S., laying the foundation for stablecoin regulation and boosting institutional confidence in blockchain innovation. That legislation has already prompted banks like JPMorgan, Citigroup, and Bank of America to evaluate the use of stablecoins for payments.

Yet what Goldman and BNY are building goes beyond simple transactions. Tokenized money market funds could usher in a new era of institutional cash management, where security, yield, and liquidity coexist seamlessly on-chain.

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Leading financial institutions in the US are taking action to transform digital finance. This move aims to increase competition against the growth of the cryptocurrency sector and the entry of tech giants into finance. 

The banks are collaborating with organizations managing payment systems like Early Warning Services and the Clearing House, which oversee Zelle. The goal is to make payments faster, cheaper, and more secure. Although the talks are not official yet, the strategy planning process is accelerating. The banks may advance or cancel the project depending on customer demands and regulatory frameworks. 

Stablecoin and Blockchain Technology 

The planned stablecoin will be pegged to the US dollar and operate on blockchain infrastructure. This will speed up international transfers and large transactions at a lower cost. Additionally, blockchain’s transparency and security advantages will enhance financial efficiency. This system aims to bridge traditional finance with the digital economy. 

GENIUS Act: New Rules for Digital Finance 

The GENIUS Act is an important regulation aimed at establishing the legal infrastructure for the digital dollar. This law grants banks and non-bank financial institutions the authority to issue stablecoins. Publicly traded technology companies can also enter this space under certain rules. 

The law provides a comprehensive framework to regulate digital finance. It sets uniform rules for all stakeholders, creating a standardized regulatory structure. It prioritizes security and transparency. Organizations apply the highest security standards to protect customer data and transactions. Banks aim to align the project with US regulatory bodies. During this process, they evaluate technical infrastructure and carefully analyze customer demands. The goal is to maintain the highest security level and meet user needs. 

• Permission for banks to issue stablecoins 
• Permission for non-bank financial firms to issue stablecoins 
• Limited stablecoin permissions for publicly traded tech companies 
• Proposal for a uniform regulatory framework 

For example, Donald Trump launched his own meme coin. In March, his family-connected company, World Liberty Financial, announced plans to issue a stablecoin. These moves are pushing major banks to accelerate their digital strategies. Banks do not want to lose advantages to aggressive and flexible competitors. Many crypto-focused companies are striving to comply with official banking regulations. These firms believe the GENIUS Act will make the process more accessible. 

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Bank of America Market Analysis 

In a note dated May 8, Michael Hartnett stated that the rally surged in the second quarter due to tariff optimism. However, this recovery has now ended. Investors are following a “buy the rumor, sell the fact” strategy. Although the S&P 500 rose 14% after Trump’s tariff pause announcement on April 9, it is down 3.7% for the year. 

Hartnett believes U.S. stocks are in a “late-stage structural bear market.” For this reason, he recommends bonds and international markets over stocks. Foreign markets are outperforming the U.S. 

Bank of America Data and Investor Movements 

Bank of America’s data shows that $24.8 billion has flowed out of U.S. stocks over the past four weeks. This figure, sourced from EPFR Global, marks the largest outflow in two years. Investors are uncertain about the market’s future. This aligns with Hartnett’s warning that the rally is over. 

Still, there are some market movements. Trump’s consideration of tariff cuts during weekend talks with China sparked a short-term rise in indices. The Dow Jones rose 0.6%, the S&P 500 gained 0.6%, and the Nasdaq climbed 1.1%. However, futures remained nearly flat on Friday morning. 

Trump announced a trade framework with the UK. This is the first deal under the U.S.’s “reciprocal tariff” policy. The UK faces a 10% base tariff. Chris Zaccarelli of Northlight Asset Management calls this deal a “test run.” Agreements with China and other major trade partners will be more critical. 

Meanwhile, Trump’s optimism about China talks has* sparked market activity. However, investors remain cautious. Large bets are not being placed in futures. The S&P 500 is set to close the week with a 0.4% loss. The Nasdaq is down 0.3%, while the Dow is up 0.1%, marking its third positive week. 

The market is awaiting the outcome of Trump’s China talks. Reuters reports that tariff negotiations with China are at a critical stage this weekend. If a deal is reached, it could spark new market activity. According to The Wall Street Journal, investors are avoiding risks due to long-term uncertainties. 

In conclusion, Bank of America’s warning and investors’ cash withdrawals indicate that the stock market rally has stalled. Hartnett’s recommendation to shift to bonds and international markets may offer investors a new roadmap. 

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Bearish Signals Strengthen for XRP 

On the daily chart, XRP is forming a bearish symmetrical triangle pattern. This suggests a potential 40% drop to $1.25. Additionally, transaction volume on the network is declining. 

Volatility Ahead of Fed Meeting 

Ahead of the Fed’s interest rate decisions, XRP faces a $55 million liquidation risk. Open interest has decreased by $500 million, falling to $3.8 billion, indicating shaken investor confidence. The XRP/BTC ratio is also at a three-week low, showing weakness against Bitcoin. 

Foreign Analysts’ Predictions 

Bank of America predicts XRP could reach $15 by 2030. However, in the short term, Bybit data reveals that $8 million in long position liquidations is fueling selling pressure. CryptoQuant notes that the MACD indicator has turned negative, but the 45% RSI level offers a slight chance of recovery. 

• Kraken analyst James points out that the MACD has turned negative, but the Bollinger Bands are narrowing. This suggests potential increased volatility. 
• A break below a support level (e.g., closing below $2.00 USD) could trigger a move toward the next support levels ($1.96 or $1.77 USD). 
• A breakout above resistance levels (e.g., $2.20 or $2.48 USD) could initiate a new uptrend. A breakout supported by volume increases the reliability of the move. 

Analysts predict that, thanks to Ripple’s technological infrastructure and institutional adoption, Ripple could test the $3.00–$4.00 USD range by the end of 2025. While XRP faces short-term pressure, it holds long-term potential. Closely monitoring the market is crucial. 

***NOT INVESTMENT ADVICE ***

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Bank of America and Webull Decisions Increased Selling Pressure

In a regulatory filing dated March 17, Bakkt disclosed that two key clients would not renew their commercial agreements. Bank of America will terminate its existing agreement on April 22, while the brokerage platform Webull will end its contract on June 14.

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According to the filing, Bank of America accounted for 17% of Bakkt’s loyalty services revenue for the nine months ending September 30, 2024. Webull contributed 74% of the company’s crypto services revenue during the same period.

Shares Crash to New Lows!

Following this development, Bakkt (BKKT) shares dropped 27.28% on March 18, closing at $9.33. In after-hours trading, the shares fell an additional 2.25%, reaching $9.12.

Bakkt’s stock price has plummeted more than 96% from its all-time high of $1,063, recorded in October 2021.

Bakkt has postponed its previously announced earnings conference call twice. The latest rescheduling sets the call for March 19. These delays have added further uncertainty for investors.

Class Action Lawsuit on the Horizon!

The Law Offices of Howard G. Smith announced a potential class action lawsuit against Bakkt following the termination of agreements with Bank of America and Webull. The statement claims that the canceled agreements and the delayed earnings call led to a sharp decline in Bakkt’s stock price, “thereby injuring investors.”

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Bringing Inflation Down Will Take Time

According to Moynihan, the Fed’s 2% inflation target is not easily achievable. By keeping interest rates unchanged and maintaining tight monetary policy, central bank officials expect markets to cool and price pressures to ease. However, Moynihan stated that this process may take longer than expected and investors should not expect a quick rate cut.

Call for Simpler and Clearer Regulation for Banks

Moynihan said that regulation of the banking sector in the US has become too complex, making it difficult for banks to operate in a stable manner.

“Give us a regulatory framework that makes sense and make it permanent. We can’t reassure our clients for the long term because of the ever-changing rules.”

BofA CEO stated that uncertainties have increased, especially regarding money laundering (AML), customer recognition (KYC) and mandatory reporting obligations, and that they could not even explain to customers why some accounts were closed.

“Debanking” Debates between Trump and Banks

BofA and JPMorgan will lobby the White House and Congress to counter political accusations against banks by former US President Donald Trump and some Republicans.

Trump has accused big banks of closing the accounts of conservative clients and denying services to industries such as arms manufacturers and fossil fuel companies. Republicans have called this “woke capitalism,” while banks say they are not closing accounts for political reasons and that the process is driven by regulatory rules. Moynihan emphasized that this issue is not political, but is entirely dependent on banking rules.

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Previously anticipating two 25-basis-point cuts this year, Bank of America announced it now expects no rate cuts. The bank highlighted the risk of the Fed’s next move being a hike rather than a cut.

Citigroup maintains its forecast of five 25-basis-point rate cuts but shifted the timeline, expecting cuts to start in May rather than January. Meanwhile, Goldman Sachs lowered its forecast to two rate cuts this year, down from three.

Bank of America Insights

Aditya Bhave and his team at Bank of America stated, “Following the robust December nonfarm payroll report, we believe the cutting cycle is over.” They also noted that if core PCE inflation surpasses 3% or inflation expectations rise, the Fed might consider raising rates instead.

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Andrew Hollenhorst and Veronica Clark from Citigroup dismissed concerns about the Fed refraining from cuts or even considering rate hikes this year. They emphasized that while employment is stronger than expected, both price and wage inflation are decreasing, enabling officials to feel comfortable implementing rate cuts.

Led by Jan Hatzius, Goldman Sachs economists projected rate cuts in June and December this year and again in June 2026. However, they revised their previous forecast of cuts in March, June, and September, now estimating a terminal rate of 3.5% – 3.75%.

December Nonfarm Payroll Data Impact

The U.S. December nonfarm payroll figure came in at 256,000, significantly exceeding expectations. This led to a reduction in rate cut expectations, with markets now pricing in just 30 basis points of cuts by the end of 2025. The mid-year cut expectation has been postponed to September.

Since September, the Fed has reduced its policy rate by 100 basis points to the range of 4.25% – 4.5%.

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