Analysts see crypto gains from Fed support

• Analysts said cryptocurrencies could benefit if the Federal Reserve increases liquidity during a major US stock market downturn.
• The US stock market has grown to about US$75 trillion, increasing expectations that policymakers could intervene during a severe sell-off.
• Analysts said any Federal Reserve action would likely support cryptocurrencies indirectly through improved market liquidity rather than direct intervention.

Bitcoin (CRYPTO:BTC) and other cryptocurrencies could benefit if the US Federal Reserve introduces measures to support the US$75 trillion stock market during a severe downturn, according to several market analysts.

The US equity market has risen about 68% over the past five years and added roughly US$6 trillion in value this year, prompting some analysts to suggest the Federal Reserve could consider purchasing equity exchange-traded funds if market conditions deteriorate significantly.

“Once the Fed steps in, rate cuts, balance-sheet expansion, even targeted ETF purchases, crypto has historically entered a medium-to-long-term uptrend,” said Bitget Wallet Chief Operating Officer Alvin Kan.

Analysts said any Federal Reserve intervention would increase market liquidity rather than directly support cryptocurrencies, with Bitcoin and other digital assets historically responding positively to easier monetary conditions and stronger investor risk appetite.

Jeff Mei, Chief Operating Officer of BTSE, said persistent inflation could limit the Federal Reserve's ability to introduce additional monetary stimulus, while adding that policymakers still have other tools available to respond to financial market stress.

Bloomberg ETF analyst Eric Balchunas said about 58% of Americans own shares, arguing that widespread household exposure could increase pressure on policymakers to support markets during a prolonged downturn.

HashKey Group Senior Researcher Tim Sun said cryptocurrency prices remain closely linked to US dollar liquidity, real interest rates and broader equity market sentiment, suggesting any improvement in financial conditions could also support digital asset markets.

At the time of reporting, Bitcoin price was $62,011.29.