The Federal Reserve's "gradual money printing" mode begins: How does macro liquidity affect cryptocurrencies?

“Whether the Federal Reserve is engaging in quantitative easing or not, the essence remains the same,” economist Lyn Alden pointed out in her February 8 investment strategy newsletter. Her basic forecast aligns broadly with the Fed’s expectations: the pace of its balance sheet expansion will be similar to the growth rate of total bank assets or nominal GDP. This suggests that a pattern called “gradual money printing” may have already begun.

Policy Interpretation

The Fed’s “gradual money printing” did not appear out of nowhere but is a key part of a recent series of policy measures. This process mainly involves digital operations by the central bank, such as purchasing government bonds and other financial assets, injecting funds into the banking system.

By December 2025, the Federal Reserve will have lowered the benchmark interest rate to a range of 3.50%-3.75% and announced the restart of its $40 billion monthly government bond purchase program. This move is widely interpreted by markets as a measure to maintain financial system liquidity after ending balance sheet reduction.

Fed Chair Jerome Powell has signaled a shift in policy focus on multiple occasions. He emphasized that “employment risks outweigh inflation,” indicating that monetary policy is shifting from “inflation fighting” to “growth stabilization.” After the most recent Federal Open Market Committee meeting, Powell admitted that “inflation risks remain tilted to the upside, while employment risks are tilted to the downside.”

Market Expectations

Market expectations for the Fed’s next move are changing. According to CME FedWatch data, only about 19.9% of traders expect a rate cut at the March meeting, down from 23% a few days earlier.

As the transition of Fed leadership approaches, market uncertainty increases further. Current Chair Powell’s term ends in May 2025, and President Trump’s nominee to succeed him, Kevin Woor, is considered more inclined toward tightening monetary policy than other candidates. This leadership transition casts a shadow over the interest rate policy direction in 2026. Fidelity Investments notes that future market interest rate trends may be more driven by speculation around the new chair candidate rather than upcoming economic data releases.

Macro Impact

This macro environment of “gradual money printing” has produced differentiated effects on various asset classes. Lyn Alden recommends investors continue holding “high-quality scarce assets” while shifting from overly speculative sectors to under-allocated areas.

When interest rates are low and money supply is ample, investors tend to seek higher returns in riskier assets. This liquidity environment traditionally supports investments in stocks, cryptocurrencies, and other risk assets.

Senior fund manager Larry Lepard also believes that the Fed’s balance sheet expansion since late 2025, mainly through reserve management rather than open-ended quantitative easing, is quietly injecting liquidity into the market. He specifically points out that this environment may benefit scarce assets like Bitcoin.

Crypto Market

This macro environment of “gradual money printing” has profound implications for the cryptocurrency market. Crypto markets will not decouple from macroeconomic trends but will become more closely integrated.

The current market structure has fundamentally changed. It now divides into three layers: regulated areas (such as RWA tokenization and institutional custody), unregulated areas (highly speculative sectors), and shared infrastructure (such as stablecoins and oracles). This segmentation alters capital flow patterns. In the past, when Bitcoin rose, other cryptocurrencies would also increase through a drip effect. Now, most institutional capital entering via ETFs remains in Bitcoin.

Asset Performance

Under the macro narrative of “gradual money printing,” the performance of mainstream crypto assets shows different characteristics. According to Gate data, as of February 9, 2026:

Bitcoin’s price increased by 1.93% in the past 24 hours to $70,727, with a market cap of $1.41 trillion, accounting for 56.14% of the market share. Ethereum’s price fluctuated slightly, reaching $2,086.84, with a market cap of approximately $252.82 billion.

Market analysis indicates Bitcoin may face resistance around $71,000–$73,000, with support levels near $65,000–$62,500. Breaking through the key resistance zone of $75,000–$77,000 could open the way toward $80,000–$83,500.

Bitcoin’s market cap has returned above $1.41 trillion, and Ethereum’s market cap remains steady at $252.82 billion. Market segmentation continues: regulated sectors are steadily growing, while unregulated sectors experience large fluctuations. Looking at Gate’s trading data, Bitcoin’s 24-hour trading volume reached $800.96 million, maintaining high market activity. As the riskiest end of the liquidity curve, cryptocurrencies only fully benefit when liquidity flows downstream sufficiently.

Powell’s “balance sheet reduction endpoint” theory acts like a deep-water bomb, with its shockwaves penetrating every corner of the global financial markets. At the intersection of macro policy and market structure transformation, the crypto market is also experiencing a critical shift from independent volatility to becoming part of the global systemic network.