FX168 Financial News Agency (Asia Pacific) reports that Jamie Dimon, CEO of JPMorgan, warned that the Federal Reserve and the US dollar have not yet "escaped the trap," and the worst outcome could be stagflation. Billionaire Elon Musk supports a serious warning of US dollar inflation and believes that US national debt will reach $36 trillion by the end of 2024. Forbes reports that the market is preparing for an inevitable crash in Bitcoin.

According to US media, over the past month, the price of Bitcoin has fluctuated between a high of $65,000 and a low of nearly $50,000. BlackRock, the Wall Street asset management giant with $10 trillion under management, has issued a severe volatility warning.

Now, with Musk's concerns about a "total collapse" of the US dollar, Dimon warns that the Federal Reserve and the US dollar have not yet "escaped the trap".

(Source: Forbes)

According to CNBC, Dimon said at the New York Institutional Investor Fall Conference, "I think the worst outcome is stagflation, economic recession, rising inflation, and I don't rule out that possibility."

Stagflation is the definition economists give to an economy that suffers from both a spiral of rising prices and low growth, and is generally considered a difficult economic condition to recover from.

Dimon stated that factors such as rising deficits, increasing US debt (reaching $35 trillion), and increased infrastructure spending will put pressure on the US economy.

He mentioned: "In the short term, in the next few years, they will basically all lead to inflation. Therefore, it is difficult to say 'we have overcome the difficulties', I don't think so."

Before Damon issued the inflation warning, Musk warned that by the end of 2024, the interest payments on the huge US national debt will continue to rise, and the scale of inflation will reach 36 trillion US dollars.

Due to the market's preparation for the Federal Reserve's first interest rate cut in the post-pandemic era, the price of Bitcoin has fluctuated significantly in the past month, with the majority of traders betting that the Federal Reserve will cut rates by 25 basis points or 50 basis points.

Russ Mould, investment director of brokerage firm AJ Bell, said in an email comment: "The focus of investors this week is the scale of the Federal Reserve's interest rate cut. Given the concerns about the weak job market, a 25 basis point rate cut by the Federal Reserve will be seen as the beginning of a 'mild and gradual relaxation of monetary policy. However, traders are increasingly concerned about the magnitude of the interest rate cut. The possibility of a 50 basis point cut during the meeting is 59%.

Although the market generally expects the Federal Reserve to cut interest rates during its two-day policy meeting later this week, which may signal a new cycle of lower borrowing costs and increased liquidity. However, weaker-than-expected US employment data has raised concerns that the Federal Reserve has waited too long to cut rates, which may lead to an economic downturn.

Mould added: "Some people think that the Fed's actions are too slow, but it is caught between catching up and over-easing."

He explained: "A half-percent rate cut will indicate that the Federal Reserve does want to make the lives of consumers and businesses easier, hoping that they will spend more money. However, some investors may interpret this as an indication that the Federal Reserve is indeed worried about the economic situation. Therefore, it is difficult to predict with certainty how the market will react if the Federal Reserve really cuts rates by 50 basis points."

Traders expect this week's Federal Reserve meeting to kick off a series of interest rate cuts, with investors betting that the rate cuts will continue until the end of the year.

Tagus Capital analyst at the risk investment company wrote in an email comment: "The first interest rate cut by the Federal Reserve may not be the largest, but the central bank may release a signal of rapidly shifting to a neutral policy environment, so it may include a 50 basis point rate cut before the end of the year."

The analyst added that the previous rate cuts by the Federal Reserve have always been a bullish indicator for Bitcoin prices and the wider cryptocurrency market.

"Overall, this may lead to the recovery of US dollar liquidity, and historically, the digital asset cycle closely follows this liquidity cycle."