QCP Capital forecasts ongoing volatility in the crypto market until at least August 24, noting that a market recovery remains uncertain. The current instability is largely attributed to the lack of clarity on future policies from the Federal Reserve and the Bank of Japan.

Fed Likely to Avoid Emergency Rate Cut to Prevent Deepening Recession Concerns

Some of the major institutions are still expected to release updates soon. In this respect, the speech from Bank of Japan’s Deputy Governor Uchida will occur on Wednesday, and the Federal Open Market Committee meeting scheduled for August 22-24 at Jackson Hole. It is also widely believed that the Fed cannot afford to make a drastic emergency rate cut. Because it might weaken the authority of the Fed and deepen concern of people about a recession.

More recently, the U.S has come to the aid of the volatile market to boost its liquidity through interventions. This was especially seen in the cryptocurrency market where high level of spot demand in Coinbase order books was reported. Consequently, the Bitcoin price recovered to $56,000, and Ethereum briefly touched $2,500 before the end of the U.S. trading session. This support has helped briefly stabilize the market, but it is still unclear.

Crypto Volatility Remains High Despite Market Rebound

Global macro markets also rebounded. Japan’s market today recorded a gain of 9% after a dismal performance in the previous trading session which saw it lose 12%. Futures in the U.S. also pointed to a rebound, helped by stronger than expected ISM number that showed that the service sector in the U.S. expanded in July.

Despite these encouraging indicators, it would be premature to identify a trend toward business as usual. Specifically, the VIX, an index of the market’s volatility, has slightly declined since its high of over 65 but is above 30.

Lastly, it is seen that asset prices will continue to be uncertain until there are crystal clear signals on the direction of policies by both the Fed and BoJ. The present condition shows, as anticipated by QCP Capital, that investing in these sectors is still prone to risks and fluctuations until these primary institutions come up with more information.