The US Federal Reserve is entering into a “gradual” era of money printing that will stimulate asset prices “mildly” but will not be as dramatic as the “big print” that many in the Bitcoin ($BTC) community anticipated, according to economist and Bitcoin advocate Lyn Alden.
“My base case is roughly in line with what the Fed expects: to grow its balance sheet approximately at the same proportional pace as total bank assets or nominal gross-domestic product (GDP),” Alden said in her Feb. 8 investment strategy newsletter, adding:
“Overall, it means I continue to want to own high-quality scarce assets, with a tendency to rebalance away from extremely euphoric areas and toward under-owned areas.”
Federal Reserve M2, a measure of the money supply, continues to expand with time. Source: FRED
The comments followed US President Donald Trump’s nomination of Kevin Warsh to be the next Federal Reserve Chairman, which caused a furor among market traders, who perceived Warsh as more hawkish on interest rates than other potential Fed picks.
Interest rate policy can influence crypto prices. Expanding credit by increasing the money supply is typically seen as bullish for assets, and a contraction of the money supply through higher interest rates typically leads to economic slowdown and lower prices.
Related: Bitcoin investor sentiment cools amid US shutdown fears, Fed policy jitters
No rate cut expected at next FOMC meeting
Some 19.9% of traders expect an interest rate cut at the next Federal Open Market Committee (FOMC) meeting in March, down from Saturday, when CME Fedwatch showed 23% of respondents forecast a rate cut.
Target rate probabilities ahead of the March FOMC meeting. Source: CME Group
Current Federal Reserve Chairman Jerome Powell has repeatedly issued mixed forward guidance about interest rate policy despite slashing rates several times in 2025.
“In the near term, risks to inflation are tilted to the upside and risks to employment to the downside, a challenging situation. There is no risk-free path for policy,” Powell said following the December FOMC meeting.
Powell’s term as Federal Reserve chairman expires in May 2025, and Warsh has yet to be confirmed as the next chairman by the US Senate, fueling investor uncertainty about the direction of interest rate policies in 2026.
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