Despite the broader market downturn, driven by significant uncertainty and recession fears, the Federal Reserve likely doesn’t see the situation as severe enough to justify implementing a quantitative easing strategy.
To understand when the Federal Reserve might use quantitative easing to address greater market instability and how that could affect Bitcoin’s price, BeInCrypto interviewed experts from 22V Research, CryptoQuant, and BingX.
Navigating 2025 Market Headwinds
Markets have faced significant challenges since the start of 2025. Concerns ranging from a potential tariff war between the US and other major global economies to slowing economic growth, recession fears, and rising inflation have left investors riddled with uncertainty.
Two days ago, the US stock market recorded its worst initial 100 days of any presidential term since Gerald Ford took office in 1974. The crypto market did not go unharmed in the process. Despite a subsequent price recovery, Bitcoin’s value dipped below $77,000 in the past month, while altcoins suffered even more significant losses.
Trump’s 90-day pause on most tariffs calmed investors and restored market confidence. However, what will happen when this period ends remains a significant stress point. At the same time, concerns about inflation and economic stagnation are also intensifying these fears.
“Due to the uncertainty this change brings, [investors] have lost faith in what the future holds. Investors need to have a vision of the future and right now it is very murky causing them to sit back and wait in a similar way to businesses having trouble making decisions about the future,” Jordi Visser, Head of AI Macro Nexus Research at 22 V Research, told BeInCrypto.
Heads are now turning to the Federal Reserve to see what strategies it may consider to soothe uncertainty and economic duress. Some analysts predict a shift toward quantitative easing (QE).
A Central Bank’s Tool for Liquidity
QE is a tool central banks use to inject liquidity into the financial system during periods of particular economic uncertainty.
In implementing this measure, banks purchase assets, typically government bonds, from commercial banks and other financial institutions in the open market. They hope to lower long-term interest rates and encourage consumer spending by doing so.
The effects of QE can significantly influence the price of Bitcoin in the process, primarily through its impact on market liquidity, investor sentiment, and the perceived value of fiat currencies. The coronavirus pandemic served as a key example of this dynamic.
In March 2020, as the pandemic triggered a global financial crisis, Bitcoin’s price experienced a dramatic crash, plummeting from around $8,000 to a low of $3,800. However, the Fed’s subsequent implementation of aggressive QE measures coincided with a significant recovery and eventual surge in Bitcoin’s price.
“In the most succinct way, quantitative easing (QE) served as a catalyst by increasing liquidity, lowering yields, and creating a risk-on environment, all of which enhanced Bitcoin’s attractiveness as both a hedge and a speculative asset. The surge in 2020 established a precedent for how shifts in macroeconomic policy can influence cryptocurrency markets, a trend that remains popular with renewed QE speculation in 2025,” Vivien Lin, Chief Product Officer at BingX, told BeInCrypto.
With access to lower interest rates and increased liquidity, investors with a risk appetite felt more inclined to buy the asset. Investors commonly look for alternative assets to fiat currency when facing heightened uncertainty.
The Role of Bitcoin as an Alternative Asset
Recent volatility and geopolitical pressures have spiked investor interest in cryptocurrencies.
“Institutional investors are taking advantage of market volatility by increasing their allocations to cryptocurrencies and utilizing digital assets as a hedge against geopolitical risks. Meanwhile, retail investors are maintaining a steady approach, emphasizing long-term strategies and selective rebalancing,” Lin explained.
Lin added that institutions, in particular, are increasingly considering cryptocurrencies as a key component of their portfolios.
Michael Saylor’s Strategy has become an aggressive Bitcoin accumulator, while other corporations like GameStop and Fold Holdings have recently begun diversifying their treasuries by incorporating Bitcoin.
Julio Moreno, Head of Research at CryptoQuant, has recently noticed a similar trend among large holders.
“We definitely have seen large holders accumulating Bitcoin since prices declined below $90,000 at the end of February. The total balance of large Bitcoin holders (holding 1,000-10,000 Bitcoin) has increased from 3.39 million to 3.49 million Bitcoin since late February, an increase of ~110,000 Bitcoin. This indicates that large investors have been purchasing Bitcoin as prices declined,” Moreno told BeInCrypto.
With Bitcoin’s already apparent appreciation as an alternative asset, better economic conditions provided by the Fed’s QE strategy could bode favorably for its price.
The Bullish Case for Bitcoin
Just last month, Arthur Hayes, former CEO of BitMEX, predicted that Bitcoin could reach $250,000 by the end of 2025 if the Fed shifts to QE to support markets.
Visser echoed this view, suggesting that implementing QE now would further increase interest in Bitcoin.
“Bitcoin has three components to it. The first is that it is outside the fiat system so as people doubt what is happening to the current financial system, investors are looking outside for possible investments that could be a store of value during the turbulence. The second is like fiat risk assets, it historically benefits during periods where global liquidity increases which would occur if QE was needed. Finally, it is a digital asset and part of the growth of the digital economy. Stablecoins continue to see volume growth and support from the US government which helps the network effects for Bitcoin,” he explained.
However, experts admit that the current economic situation isn’t sufficiently grave to qualify for a QE adoption by the Fed.
Why QE Isn’t Imminent
Moreno explained that the current Bitcoin volatility, although higher than in previous weeks, is still far from other periods when the market faced uncertainty.
“For example, the intra-week Bitcoin price volatility spiked to 72% on the COVID market crash in March 2020. This same metric increased to 49% after the Terra-Luna crash in May 2022, and to 31% due to the collapse of FTX in November of that same year. More recently, in March 2023, the volatility also reached 31% due to the SVB bank run. In comparison, the volatility has ranged between 8% and 21% since February, when the announcements about the US tariffs started to be more recurrent,” he detailed.
Visser agreed, adding that:
“For [QE] to occur, I think we would need to either see a significant drop off in economic activity or more intense disruptions in the US bond market.”
According to Lin, it’s not a good time to inject liquidity, given that the Fed recently announced a downgraded GDP Growth forecast for the American economy.
“The Fed’s recent downgrade of 2025 GDP growth to 1.7% from 2.1% and heightened inflation expectations suggest a cautious approach should be taken. However, Chair Powell has emphasized flexibility in these assessments, noting that ‘policy is not on a predetermined path,’” Lin explained.
This adaptable approach allows for QE to be implemented in the future should conditions worsen.
How Could a QE Strategy Affect Institutional Adoption?
Though the current state of the American economy doesn’t require the Fed to adopt a QE strategy, it remains a valid option should conditions worsen during the remainder of Trump’s presidency.
“While immediate quantitative easing remains unlikely, a combination of labor market fragility, deflationary signals, and liquidity strains could override the current QT trajectory, especially if geopolitical risks materialize into broader economic fallout,” Lin said.
Beyond affecting prices, another round of QE could significantly influence institutional adoption, regulatory scrutiny, and the general perception of Bitcoin and other cryptocurrencies.
“Quantitative easing (QE) could serve as a means for cryptocurrency to mature further, integrating it into global finance while testing its decentralized foundations. Institutions would use this increased liquidity to develop infrastructure, while regulators would focus on implementing systemic safeguards. As a result, Bitcoin’s identity would shift from being viewed merely as a speculative asset to becoming a key component of macroeconomic strategies,” Lin concluded.
Ideally, the economic situation will not require such intervention. However, should QE become necessary, it could create positive momentum for the digital asset industry.
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