The Federal Reserve has announced a slowdown in its balance sheet reduction, potentially affecting liquidity and the cryptocurrency market.
Fed Policy Changes
Federal Reserve Chairman Jerome Powell announced a technical adjustment to slow the pace of asset reduction. Starting in April, the cap on Treasury redemptions will be lowered from $25 billion to $5 billion. This policy aims to decelerate balance sheet reduction, affecting market liquidity.
Crypto Market Reaction
In response to the Fed's decision, Bitcoin rose by 2.1%, reaching $43,250, indicating investor optimism about potential liquidity increases. Raoul Pal, CEO of Real Vision, emphasized that this could benefit risk assets, including crypto. Additionally, GitHub activity in the crypto community remained stable, reflecting a cautious but positive outlook.
Potential Market Implications
Bitcoin is trading between $42,500 and $44,000. Ethereum also saw gains, reaching $2,780. Experts noted that past decisions like this led to increased liquidity and temporary asset boosts. Analysts assert these trends are in line with previous Fed decisions, indicating potential regulatory adjustments and market adaptation.
The current slowdown in the Fed's balance sheet reduction may enhance liquidity and positively impact the cryptocurrency market, though future trends require careful monitoring.
