Despite wider market slump caused by substantial uncertainty and fear of recession, the Federal Reserve may not be looking at a situation that is severe enough to justify implementing a quantitative mitigation strategy.
To understand how the Federal Reserve uses quantitative easing at the time to increase market instability and how it affects Bitcoin prices, Beincrypto interviewed experts at 22V Research, Cryptoquant, and BINGX.
Navigate the headwinds of the 2025 market
The market has faced significant challenges since its launch in 2025. Concerns ranging from the possibility of a tariff war between the US and other major global economies to slowing economic growth, fears of a recession and increasing inflation have flare up investors.
Two days ago, the US stock market recorded the worst 100 days of presidential term since Gerald Ford took office in 1974. The crypto market was not unharmed in the process. Despite the subsequent price recovery, Bitcoin’s value has fallen below $77,000 in the past month, but Altcoins suffered even more significant losses.
Trump’s 90-day suspension on most tariffs has calmed investors and restored market confidence. However, what happens when this period ends remains an important point of stress. At the same time, concerns about inflation and economic stagnation have also strengthened these fears.
“Because of the uncertainty this change brings, (investors) have lost faith in what the future will be. Investors need to have a vision for the future. For now, they are waiting in the same way as companies struggling to make decisions about the future,” Jordi Visser, head of AI Macro Nexus Research, told Beincrypto.
Now, the head is heading towards the Federal Reserve to see which strategies will be considered to alleviate uncertainty and economic obsessions. Some analysts have predicted a shift towards quantitative mitigation (QE).
QE is a tool that central banks use to inject liquidity into their financial systems during periods of specific economic uncertainty.
When implementing this measure, banks typically purchase government bonds from commercial banks and other financial institutions on the open market. They hope to cut long-term interest rates and encourage consumer spending in doing so.
The impact of QE can have a significant impact on Bitcoin price in the process, primarily through its impact on market liquidity, investor sentiment, and the perceived value of Fiat currency. The coronavirus pandemic served as an important example of this dynamic.
In March 2020, Bitcoin prices experienced a dramatic crash as the pandemic sparked a global financial crisis, plunging from around $8,000 to a low of $3,800. However, the subsequent implementation of the Fed’s aggressive QE measures coincided with a major recovery and a final surge in Bitcoin prices.
“In the most simplified way, quantitative mitigation (QE) served as a catalyst by increasing liquidity, lowering yields and creating a risk-on environment. All of this has enhanced the appeal of Bitcoin as both a hedging and a speculative asset. Lin, chief product officer at Bingx, told Beincrypto.
With access to lower interest rates and increased liquidity, we felt that investors with risk appetite were more likely to buy assets. Investors generally look for alternative assets to Fiat currency when uncertainty increases.
The role of Bitcoin as an alternative asset
Recent volatility and geopolitical pressures have skyrocketed investors’ interest in cryptocurrency.
“Institutional investors are leveraging market volatility by increasing cryptocurrency allocations and using digital assets as a hedge against geopolitical risks, while retail investors maintain a stable approach and emphasize long-term strategies and selective rebalancing,” Lynn explained.
Lynn added that institutions in particular are increasingly considering cryptocurrencies as a key component of their portfolio.
Michael Saylor’s strategy has become an aggressive Bitcoin accumulator, but other companies such as GameStop and Fold Holdings have recently begun diversifying the Ministry of Finance by incorporating Bitcoin.
Julio Moreno, head of research at Cryptoquant, has recently noticed a similar trend among large owners.
“We have definitely seen a large owner accumulating Bitcoin since prices fell below $90,000 at the end of February.
With the obvious valuation of Bitcoin as an alternative asset, the better economic situation provided by the Fed’s QE strategy could be a positive foreshadowing due to its prices.
Bitcoin bullish case
Last month, former Bitmex CEO Arthur Hayes predicted that Bitcoin could reach $250,000 by the end of 2025 if the Fed moves to QE to support the market.
Visser reflects this view and suggests that the implementation of QE will further increase interest in Bitcoin.
“Bitcoin has three components. The first is outside the Fiat system, so investors are looking outside for investments that could become valuable during the turbulence as people doubt what is happening in the current financial system. See the growth and support of volumes from the US government to help Bitcoin’s network effects,” he explained.
However, experts acknowledge that the current economic situation is not critical enough to qualify for QE adoption by the Fed.
Why QE is not imminent
Moreno explained that Bitcoin’s current volatility is higher than in the previous weeks, but is still far from other periods where the market is facing uncertainty.
For example, the Covid market clash in March 2020 saw a volatility in Bitcoin price increased to 72%. This same metric has increased to 49% since the Teralna crash in May 2022. “8% and 21% since February, when US tariff announcements began to recur more,” he explained in detail.
Visser agreed, adding:
“For (QE) to occur, I think we need to see a significant drop in economic activity or a more intense disruption in the US bond market.”
According to Lynn, it’s not a good time to inject liquidity, given the Fed recently released its downgraded GDP growth forecast for the US economy.
“The recent downgrade of GDP growth in 2025 GDP has been from 2.1% to 1.7%, suggesting that a cautious approach should be taken, with rising expectations of inflation. However, Chairman Powell emphasized flexibility in these assessments, saying “policies are not on a pre-determined path.”
This adaptable approach allows QE to be implemented in the future if conditions deteriorate.
How does QE strategy affect system adoption?
The current state of the US economy does not require the Fed to adopt a QE strategy, but if the worsening conditions worsen during Trump’s presidency go down, it remains a valid option.
“While immediate quantitative easing remains unlikely, the combination of labor market vulnerability, deflation signals and liquid stocks could negate the current QT trajectory, especially when geopolitical risks are realized for a wider economic fallout,” Lynn said.
In addition to affecting prices, another round of QE could have a significant impact on institutional adoption, regulatory scrutiny, and public perceptions of Bitcoin and other cryptocurrencies.
“Quantitative mitigation (QE) could serve as a means for cryptocurrencies to further mature and integrate into global finance while testing decentralized foundations. Institutions will use this increased liquidity to develop infrastructure, while regulators will focus on implementing systematic safeguards. Conclusion.
Ideally, the economic situation does not require such intervention. However, if QE is needed, it could create positive momentum for the digital asset industry.
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