Analysis: If the Federal Reserve supports the U.S. stock market, the cryptocurrency market may benefit from the liquidity injection

According to Cointelegraph, the U.S. stock market has grown by 68% over the past five years, adding about $6 trillion in market value this year, with 58% of Americans holding stocks. Analysts warn that if the stock market experiences a significant correction, the Federal Reserve may break decades of precedent by supporting the market through methods such as purchasing stock ETFs.

Alvin Kan, Chief Operating Officer of Bitget Wallet, stated that once the Federal Reserve intervenes (by lowering interest rates, expanding the balance sheet, or even purchasing ETFs), the cryptocurrency market typically enters a medium to long-term upward trend in its history, due to the restoration of risk appetite and the flow of funds back into high-beta assets. Tim Sun, a senior researcher at HashKey, pointed out that the macro pricing of crypto assets is still linked to U.S. dollar liquidity, real interest rates, and stock market risk sentiment. Once the market is convinced of a policy bottom, the risk premium for high-volatility assets will compress, benefiting Bitcoin and mainstream crypto assets.