Given the low probability of a rate cut in May by the Fed, according to the CME "FedWatch", investors need to adjust their strategies in crypto assets and other risk assets.
The postponement of expectations for lower rates suggests a financial environment with high rates for a longer time, which generally negatively impacts higher-risk assets due to the increased cost of capital and lower liquidity.
A prudent response involves considering a more cautious stance, which could translate into a reduction in exposure to crypto assets and other high-volatility risk assets.
Alternatively, or in combination, capital could be reassigned towards more defensive and lower-volatility assets, such as high-quality bonds or stocks of solid companies.
Diversification among different asset classes becomes essential to mitigate risk.
It is crucial to stay alert to communications from the FOMC and economic data, as these will influence the future direction of monetary policy and could create volatility in the markets.
Active portfolio management, with the flexibility to adjust allocations according to new perspectives, will be essential to navigate this uncertainty and protect the capital invested in crypto assets and other risk assets.