The U.S. Federal Reserve has announced a gradual approach to monetary easing aimed at modestly increasing asset prices. Economist and Bitcoin advocate Lyn Alden suggests this strategy will have a lesser impact on the Bitcoin community compared to anticipated large-scale money printing. The Fed intends to expand its balance sheet in line with the growth rates of banks’ total assets or the overall national production. Alden also emphasized the importance of holding high-quality, scarce assets, encouraging investors to diversify away from highly active sectors toward those with lower investment levels.
Meanwhile, the market has shown mixed reactions to President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair. Warsh is considered a hawkish candidate on interest rates, differing from other potential nominees. Interest rate policies significantly influence cryptocurrency prices, as increased money supply generally benefits assets, while rate hikes can lead to economic slowdown and price declines.
At the March Federal Open Market Committee (FOMC) meeting, expectations for an interest rate cut remain low, with only a few traders predicting such a move. Current Chair Jerome Powell has implemented several rate cuts in recent years but has stressed the need to balance rising inflation risks with employment concerns. Powell’s term ends in May 2025, and Warsh’s confirmation by the U.S. Senate is pending, creating investor uncertainty about interest rate policies in 2026.
The Federal Reserve’s gradual policy approach could have direct and indirect effects on global financial markets and the cryptocurrency sector, urging investors to exercise caution.
Source: binance
