If the Fed prints more money, what is at risk for Bitcoin?

When Federal Reserve civil servant Neil Kashkari appeared on CNBC and said the Fed had “a tool that provides more liquidity to the market,” Crypto X interpreted the statement as an immediate pledge to print dollars. If that happens, what will be the impact of Bitcoin?

It is not clear whether the Fed will use its tool to add liquidity to the market. Agency officials continue to reinforce their notion that they are not in a hurry to take action on the ongoing tariff disruption.

The Fed hopes to see the outcome of negotiations between the US and other countries, Kashkari said.

However, the Fed is happy with the improvement in CPI inflation rate (which reached 2.4% in March), and will not prioritize other tasks before fulfilling its mission to bring inflation to a 2% rate.

Prices fell 0.1% each month for the first time in five years.

The Fed may be deviating from cutting interest rates to keep pushing down inflation, but Trump hopes the Fed will cut interest rates to support the market.

Many experts agree that Trump wants to weaken the dollar and boost exports and offset the trade deficit. Kashkari does not view the trade deficit as extraordinary for the US

Differences in interest rates led to a slow, burning conflict between Trump and Federal Reserve Chairman Jerome Powell. Trump reportedly is about to end Powell through the Supreme Court before his term ends.

The US president cannot fire the Federal Reserve Chairman for no reason.

read more: Trump is about to fire federal government chairman Jerome Powell through the Supreme Court. Is good news for the crypto market?

Will the Fed add liquidity to the market?

The short answer is “Not yet.”

Kashkari said the Fed has tools to provide liquidity, but he noted that agents will not step in until it is clear that the market cannot fix itself. And a 90-day suspension on customs duties does not add clarity to the situation.

Given the high fear index and the likely high recession, the Fed may have been more aggressive and could have cut fees to encourage people to enter the market and inject the economy with liquidity.

The rise in bonds suggests a weaker economy, and Kashkari acknowledged that the Fed is paying close attention to this market.

But policymakers are waiting. They need to act accurately to boost inflation and prevent early increases in liquidity that may have saved the market from a complete collapse.

Kashkari points out that a decline in the US dollar during turbulence is a rare occurrence. He sees it as a change in investor preferences.

The Fed is in a favorable situation. Although inflation remains above the preferred 2% level, keeping interest rates high leads to increased mortgage interest and issues refinancing national debt.

How does inflation affect the crypto market?

If the Fed decides to bring liquidity into the market, it is not clear which method the agency will use. The Crypto X community has responded fairly obviously to Kashakari’s interview, suggesting that the Fed will print money.

Kashkari mentioned another tool to add liquidity.

He said a permanent repository facility, or a permanent contract facility in the country, is a backstop measure that reduces overnight interest rates and provides liquidity in the form of a Fed fund against U.S. Treasury debt and mortgage-backed securities.

However, short-term inflation inflows are likely, and the Fed’s challenge is not to spiral it into long-term inflation.

In recent years, inflationary spikes have stimulated the growth of cryptocurrency as people begin to look for alternative ways to save money and invest. Thus, in general, eras of economic turbulence are viewed as opportunities for crypto markets.

A clear example is the rise of the crypto market following the epic sale caused by the announcement that Covid-19 has acquired pandemic status.

Bitcoin supply continues to increase. So we can talk about Bitcoin’s own inflation, but the new BTC units constantly crash into the market at speed and end up halting at the 21 million mark. It makes Bitcoin different from Fiat Money printed by the central bank.

As a top crypto with a fixed supply, Bitcoin may be considered a hedge against inflation. Its inclusiveness, global accessibility, and government independence harnesses trust in Bitcoin, but traditional institutions and governments lose people’s trust during the inflation print.

Bitcoin is deflationary, but the supply and demand mechanism makes its value volatile in the short term. Many people point to Bitcoin’s long-term ability to accumulate value, making it a valuable asset.

Bitcoin stock correlation exists, but since it is called a definition, Bitcoin could be an alternative to traditional investments.

read more: US dollar index crashes, causing hope for bitcoin and altcoin