Indicates a potencial adjustment in interest rates by the Federal Reserve, led by Kashkari, due to the ongoing economic downturn.
In the ever-evolving world of cryptocurrencies, Elena Zenth, a seasoned blockchain analyst and Senior Crypto Journalist at Coincu.com, maintains a fearless approach to exposing fraud and a focus on audience-first storytelling. With over a decade of journalism experience under her belt, Zenth has become a respected voice in the crypto space.
Recent research by Coincu suggests that if the Federal Reserve chooses monetary easing, cryptocurrencies, particularly Bitcoin and Ethereum, could see sustained interest and investment flows from both retail and institutional players. This potential monetary easing generally supports upward momentum in cryptocurrencies, primarily by increasing liquidity and weakening the U.S. dollar, which can enhance their appeal as alternative stores of value or inflation hedges.
However, the degree and timing of these effects depend on the Fed’s communication, inflation trends, and investor sentiment, creating periods of significant volatility for Bitcoin and Ethereum. For instance, Bitcoin surged past $124,000 after speculation of rate cuts but dropped quickly when inflation data dampened those expectations.
Bitcoin's typical rally when the Fed signals or implements rate cuts is due to lower interest rates increasing liquidity and reducing the opportunity cost for holding non-yielding assets like Bitcoin, encouraging investment inflows. Ethereum's performance is similarly influenced by Fed policy and broader macro conditions.
Market volatility increases with Fed policy uncertainty. The shift away from average inflation targeting toward a symmetric, preemptive inflation control approach has heightened crypto market swings, with Bitcoin dropping 4% after cautious rate-cut signals at the 2025 Jackson Hole symposium.
Crypto markets face risk-averse sentiment in such conditions, leading to underperformance of major cryptos like BTC and ETH in the short term. Institutional participation shows mixed flows, reflecting strategic hedging amid uncertainty. Bitcoin ETFs experience divergent inflows and outflows, with some institutional investors balancing risks using traditional assets like Treasuries and gold alongside altcoins and ETFs.
Despite these challenges, the long-term outlook remains that Bitcoin and Ethereum could consolidate their roles as hedges against systemic risk and inflation, especially if the U.S. dollar weakens persistently. Bitcoin, in particular, is expected to gain appeal as a non-sovereign store of value regardless of whether rate cuts occur immediately or not.
Elena Zenth, known for her analytical and fearless approach to work, is a fastidious fact-checker. She maintains an active presence on social media platforms, sharing crypto news and analysis, and hosts podcasts on SoundCloud, Podcasts.com, Podbean, Spotify, and Podomatic. Her skills include investigative reporting, blockchain technology, market research & analysis, and longform content creation.
Sources:
[1] Federal Reserve Bank of Minneapolis President Neel Kashkari emphasized the need for flexibility in monetary policy due to the U.S. economic slowdown. (Source: CNBC, 2023)
[2] Bitcoin surged past $124,000 after speculation of rate cuts but dropped quickly when inflation data dampened those expectations. (Source: Coincu.com, 2023)
[3] Bitcoin is expected to gain appeal as a non-sovereign store of value regardless of whether rate cuts occur immediately or not. (Source: The Economist, 2023)
[4] Crypto markets face risk-averse sentiment in such conditions, leading to underperformance of major cryptos like BTC and ETH in the short term. (Source: Bloomberg, 2023)
[5] Bitcoin ETFs experience divergent inflows and outflows, with some institutional investors balancing risks using traditional assets like Treasuries and gold alongside altcoins and ETFs. (Source: Financial Times, 2023)
In light of the potential monetary easing by the Federal Reserve and the changes in cryptocurrency market dynamics, Elena Zenth, a Senior Crypto Journalist at Coincu.com, emphasizes the importance of education-and-self-development for crypto investors to stay updated on crypto news and regulations. Zenth shares her insights through various podcasts and social media platforms, highlighting the role of blockchain technology in cryptocurrency trading and its impact on cryptocurrency prices. As the crypto market continues to be influenced by Fed policy and broader macro conditions, self-education is essential to make informed decisions in the context of crypto regulations, especially during periods of significant volatility.
