Analysts suggest liquidity injections to stabilize equities could boost cryptocurrencies amid risk-on sentiment shifts.
Analysts argue the US Federal Reserve may intervene to support the $75 trillion stock market during a severe downturn, citing its systemic importance. Such a move could inject liquidity, historically benefiting high-beta assets like cryptocurrencies.
The US equity market has surged 68% over the past five years, adding $6 trillion in value this year alone. However, concerns over a potential correction have grown, with some experts warning of unsustainable growth.
If the Fed breaks precedent by purchasing equity ETFs or expanding its balance sheet, crypto markets could enter a prolonged uptrend, similar to 2021. Political pressure to avoid a prolonged bear market, given 58% of Americans own stocks, may drive such actions.