A senior Fed official believes markets are still functioning properly, but said the central bank would “absolutely” step in if financial conditions become disorderly.
The US Federal Reserve under Jerome Powell has developed a reputation for dragging its feet on implementing important policy changes. However, a top central banker has assured that the Fed is “absolutely” ready to do whatever it takes to avoid a financial crisis, whether triggered by the US-led trade war or other adverse developments.
Although the long-awaited “Fed pivot” could still be months away, policymakers appear poised to gradually ease financial conditions, beginning last month when they reduced the redemption cap on Treasurys by 80%.
Fed policy exerts a gravitational pull on global markets through US dollar liquidity, which has a direct impact on Bitcoin (BTC) and the broader cryptocurrency markets. In fact, the Fed’s impact on crypto has only grown since the COVID-19 pandemic. Since then, Bitcoin has been highly correlated with liquidity — a fact that was reinforced by a 2024 academic paper by Kingston University of London.
