Fed Intervention Could Boost Crypto Liquidity Amid Stock Market Woes

Crypto markets could benefit from increased liquidity if the US Federal Reserve steps in to support the $75 trillion equity market, according to analysts. The US stock market has grown by 68% over the past five years and added roughly $6 trillion in market value so far this year.

However, some experts warn that a major correction is possible due to years of rapid growth, which could prompt the Fed to break decades of precedent and buy equity ETFs to support the stock market. If this happens, it may set up an environment for cryptocurrencies to benefit as liquidity increases.

Alvin Kan, chief operating officer at Bitget Wallet, said that when the Fed steps in, rate cuts, balance-sheet expansion, or targeted ETF purchases can lead to a medium-to-long-term uptrend in crypto prices. This is similar to what happened in 2021 when risk appetite returned and capital rotated back into high-beta assets.

Tim Sun, senior researcher at HashKey Group, noted that the US stock market is deeply embedded in American household balance sheets, pension systems, corporate financing capabilities, and fiscal revenue dynamics. With 58% of Americans owning stocks, there will be significant political pressure to keep stocks out of a prolonged bear market.