Wall Street is discreetly gearing up for a significant alteration in the Federal Reserve’s $6.6 trillion balance sheet, coinciding with a sudden rise in Bitcoin‘s (CRYPTO: BTC) price.
According to a report, Bitcoin’s price has recovered from a recent “flash crash,” soaring nearly 10% and surpassing $111,000.
This development occurs as the Wall Street heavyweights prepare for the Federal Reserve to halt the reduction of its $6.6 trillion balance sheet, a process known as quantitative tightening, reports Forbes.
Arthur Hayes, co-founder of crypto derivatives pioneer BitMex, foresees a spike in money printing from the United States starting next year. He has predicted that it will trigger an increase in asset appreciation, with Bitcoin potentially hitting a $1 million price.
Launched in 2022, the Federal Reserve's quantitative tightening program has trimmed its balance sheet from around $9 trillion to $6.6 trillion, draining liquidity from the financial system and putting pressure on risk assets such as Bitcoin.
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Analysts from JPMorgan and Bank of America anticipate the Fed will stop the contraction of its $6.6 trillion balance sheet this month. This action is projected to stimulate risk assets like Bitcoin as cash circulates more freely, reports the outlet.
Over the past year, Bitcoin’s price has mirrored gold’s rally, with traders gravitating towards hard assets like gold, silver, and Bitcoin as safeguards against money printing and inflation that erode the dollar’s purchasing power.
The anticipated halt in the Federal Reserve’s quantitative tightening could have significant implications for Bitcoin and other risk assets.
If the Fed ceases to reduce its balance sheet, it could lead to an increase in liquidity and stimulate the appreciation of these assets. Furthermore, the potential surge in money printing predicted by Arthur Hayes could further boost Bitcoin’s price, potentially reaching unprecedented levels.
This comes as traders increasingly turn to hard assets as a hedge against inflation and the diminishing purchasing power of the dollar.
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