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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A 25 Basis Point Cut Seen as the Base Case

According to Bassi, the most likely outcome is a 25 basis point rate cut. Despite weaker labor market figures, he noted that inflation remains stubbornly high, which makes a more aggressive 50 basis point reduction far less likely.

Recession Odds and Market Sentiment

Bassi currently estimates the probability of a U.S. recession at around 40%. Still, financial markets expect only a modest easing cycle due to concerns over growth risks. He also touched on political dynamics, referencing the removal of Fed Governor Lisa Cook, but emphasized that the central bank’s independence remains intact.

If the current signs of weakness prove to be temporary, Bassi expects the Fed to pursue a shallow rate-cutting path, which could result in limited pullbacks in risk assets and a stronger U.S. dollar.

Markets Price in a High Probability of a Cut

Investor expectations strongly align with Bassi’s view. Futures markets now assign an 88% probability to a 25 basis point cut at the September meeting. This conviction has been reinforced by the release of disappointing labor market data: just 22,000 jobs added in August and an unemployment rate rising to 4.3%.

Other Institutions Weigh In

• Citi Chief Economist Andrew Hollenhorst argued that weak data supports rate cuts but does not justify a larger 50 basis point move.

• Nomura’s David Seif suggested the Fed could pursue so-called “insurance cuts” to guard against labor market weakness.

• Apollo’s Chief Economist Torsten Slok projected that despite inflation remaining above target, the easing cycle is likely to continue.

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Significant Progress in Crypto Offerings

A status chart shared by River on August 8 tracks these banking giants’ positions in custody and trading services. The snapshot reveals many firms moving from “not yet” into “exploring,” “announced,” or offering restricted access for high-net-worth clients. This trend signals that digital assets are steadily integrating into mainstream wealth management and capital markets.

Concrete Moves by Leading Banks

Tangible actions since early 2024 illustrate this transformation. For example, Morgan Stanley is considering allowing its 15,000 brokers to recommend spot Bitcoin ETFs to clients, while working on suitability guardrails and allocation limits—indicating an expansion beyond unsolicited orders.

More recently, Charles Schwab’s CEO announced plans to enable customers to trade both Bitcoin and Ethereum, aiming to provide a unified platform where all holdings can be viewed and managed.

On the banking side, PNC went further by partnering with Coinbase so that wealth and asset management clients can trade crypto directly through their PNC accounts instead of a separate platform.

Advances in Custody and Tokenization

State Street announced plans to launch stablecoins and tokenize deposits to improve settlement efficiency, with subsequent initiatives expected to tokenize bonds and money market shares.

BNY Mellon frequently appears in filings and product developments, including roles as administrator and cash custodian in ETF documents. The bank has also recently served as custodian for reserves linked to Ripple’s RLUSD stablecoin.

Next-Generation Financial Services and Pilot Projects

Citi has explored Solana for next-gen financial services and tokenization pilots, and reportedly considered custody services in early 2025.

JPMorgan launched several crypto-related projects in 2025. In June, it initiated a pilot for a tokenized deposit token issued on Base, aiming to enable instant dollar transfers.

The bank’s CEO, Jamie Dimon, revealed plans to test stablecoin services alongside the tokenized deposit pilot, though he has not retracted his previous criticisms of crypto.

Last week, JPMorgan enabled its customers to make direct crypto purchases via Coinbase without leaving their dashboard.

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What’s Driving This Forecast?

According to Citi’s latest research, the revised projection is based on three core factors:

• User adoption growth

• Global macroeconomic trends

• Demand for spot ETFs

The bank’s analysts model a 20% increase in Bitcoin network adoption, which creates a linear network effect. Alone, this factor could add approximately $75,000 to the current price level.

On the downside, weakening equities and gold performance could shave off about $3,200 from the price projection. However, an estimated $15 billion in ETF inflows is expected to add nearly $63,000 in value. Taken together, these assumptions result in a base case estimate of $135,000 per Bitcoin.

ETF Flows Becoming a Major Price Driver

Citi emphasizes that spot Bitcoin ETFs, which were approved in the U.S. in January 2024, now play a far more significant role in driving price action. Recent data suggests that over 40% of BTC’s price movements are directly influenced by ETF flows.

This surge in institutional interest is accelerating Bitcoin’s integration into traditional finance. Citi highlights that as Bitcoin becomes more entrenched in indexes, faces fewer regulatory hurdles, and attracts larger institutional investors, its price is now being shaped as much by capital flows as by its technological adoption.

The Risk Is to the Upside

Citi’s analysts believe the risk to their forecast is tilted upwards. While user activity is declining at a slower rate than expected, ETF demand is growing faster than anticipated. This combination suggests that network effects could persist longer than previously modeled — adding further bullish momentum.

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Dominance Race in Crypto Custody Services Heats Up on Wall Street

The race for leadership in crypto custody services is accelerating on Wall Street, with financial giants rushing to offer services that were once off-limits. The latest to make their move are State Street and Citi, two of the world’s largest custodian banks.

State Street, managing $46.6 trillion in assets, and Citi, with $25 trillion in custody, have both announced plans to launch crypto custody services.

This move signifies a major shift in the industry, as years of regulatory barriers had kept major financial institutions on the sidelines.

Citi and State Street’s Crypto Custody Plans

According to a report by The Information, State Street plans to launch its crypto custody services by 2026.

The firm established a dedicated digital assets division in 2021 and briefly partnered with UK-based Copper for custody technology. However, regulatory uncertainty forced the firm to shelve its plans in 2023.

Meanwhile, Citi has been exploring blockchain-based initiatives. The bank previously collaborated with Singapore-based BondbloX for tokenized bond custody and worked with Metaco on digital asset custody; Metaco was later acquired by Ripple.

Citi’s crypto strategy had been quieter compared to its peers, but recent developments suggest the bank is now focused on the sector with renewed innovation.

The Repeal of SAB 121 Opens the Door for Banks

Wall Street’s shift toward crypto can largely be attributed to the recent repeal of SAB 121, a SEC rule that restricted banks from offering crypto custody services.

Introduced in 2022, SAB 121 effectively prevented traditional banks from entering the crypto custody market, while granting exceptions to select firms like BNY Mellon. Critics argued the rule stifled innovation and gave regulators excessive control over the market.

However, with the Trump administration’s repeal of SAB 121, banks are now free to participate in crypto custody, paving the way for giants like Citi and State Street to enter the sector.

A Pro-Crypto Shift on Wall Street

For years, banks had approached crypto cautiously, wary of regulatory scrutiny and reputational risks. But with the lifting of restrictions and growing institutional demand for secure digital asset custody, the landscape has changed.

With a crypto-friendly president in office and regulatory barriers falling, Wall Street’s biggest players are no longer sitting on the sidelines—they are moving in.

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Wall Street Banks Anticipate Higher Inflation

Leading Wall Street banks, including JPMorgan, Citi, Goldman Sachs, and others, are revising their inflation forecasts upwards. They anticipate a higher CPI reading compared to the previous month’s 3.2%. This could delay the Federal Reserve’s plan for rate cuts, which has been a key factor supporting Bitcoin’s recent price rise.

Headwinds for Bitcoin

Bitcoin is facing several headwinds, including a strong U.S. dollar, rising 10-year Treasury yields, and potential regulatory tightening. Additionally, uncertainties surrounding the upcoming Bitcoin halving event and future inflation trends are causing concerns among investors.

Experts Predict Bitcoin Price Correction

Financial analysts, including Benjamin Cowen, Peter Brandt, and Markus Thielen, are predicting a potential Bitcoin price correction below $60,000. This prediction is based on historical patterns observed during previous halving events and the launch of spot Bitcoin ETFs.

Technical Indicators Pointing Towards Sell-Off

Technical indicators suggest a potential sell-off in the cryptocurrency market. Bitcoin’s price has fallen by 3% in the past 24 hours, with a decline in open interest across major exchanges like CME and BitMEX.

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