Federal Reserve Softens Tightening – Is Bitcoin the Big Beneficiary?
The U.S. Federal Reserve’s recent shift toward a more cautious approach to balance sheet reduction is reigniting debate over Bitcoin’s place in the evolving monetary landscape.
With interest rates held steady and a slowdown in Quantitative Tightening (QT), crypto markets are reacting to what some see as renewed pressure on the dollar’s long-term value.
Over the past month, the Fed trimmed $17 billion from its balance sheet, bringing it to $6.7 trillion—its lowest level since early 2020. While still substantial, the pace of QT has eased, with Treasury runoff targets lowered from $60 billion to $40 billion. Combined with steady rates at 4.25%–4.5%, this signals a potential shift away from aggressive tightening.
Investors are taking note. Bitcoin ETFs in the U.S. attracted $260 million in inflows in just two days this week, as institutional appetite for non-sovereign assets appears to be growing. This comes alongside Bitcoin’s continued strength, buoyed by concerns over long-term inflation and the expanding money supply.
Some analysts point to Bitcoin’s original mission—resisting centralized monetary expansion—as becoming more relevant again. Core Scientific’s Darin Feinstein recently highlighted that the vast majority of U.S. dollars in circulation have been created in the past quarter century, often without transparency or oversight.
Meanwhile, altcoins have shown strength following the Fed’s decision, though many traders still expect Bitcoin to lead the charge. If liquidity conditions continue to ease, risk assets may benefit broadly—but for Bitcoin, the macro environment could be a long-term catalyst rather than a short-term trade.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
