Analysts indicate potential consequences from the expansion of stablecoins in the context of Federal Reserve monetary policy.
Stablecoins and Fed Policy
Federal Reserve Chairman Jerome Powell maintains current interest rates. Analyst Max Keiser suggests this policy limits growth in M2, a measure of money circulating within the economy. Keiser states slower M2 expansion might not reduce the dollar’s value quickly enough to support increased U.S. exports.
Economic Implications for the Dollar
Keiser proposes a potential response. He indicates Trump could effectively double the available M2 money supply using dollar-linked stablecoins. This action, Keiser warns, carries the risk of reducing the dollar’s purchasing power by half. Concurrently, issuers of stablecoins reportedly acquire Bitcoin rapidly, anticipating possible future policy adjustments.
Market Reactions and Bitcoin Changes
Reactions to Keiser’s view appeared online. User Michael Jay referenced Trump Media’s recent acquisition of $2 billion in Bitcoin. Others expressed intentions to accumulate Bitcoin as a protective measure. Furthermore, data shows over 3,300 entities held shares in U.S. spot Bitcoin exchange-traded funds by February 2025, reflecting increasing institutional acceptance within the digital currency space.
The relationship between stablecoin adoption, monetary measurements like M2, and institutional Bitcoin investment forms a developing area of financial activity, monitored by traders for potential implications on asset values and currency stability.
