The US Federal Reserve is poised to use its monetary policy tools to prevent a deterioration in financial conditions if liquidity becomes scarce. In an interview, Boston Fed President Susan Collins stated that the central bank would be prepared to backstop markets if necessary. Although there are current concerns about the health of the US financial system reflected in recent stock and bond market activity, Collins noted that the Fed is not presently observing significant liquidity issues. Should that change, the Fed has tools ready to manage market functioning and liquidity. Collins, a voting member of this year’s Federal Open Market Committee (FOMC), pointed out that their recent decision to maintain interest rates has implications for market liquidity, especially given that a reduction in Treasury redemption caps could impact capital flows. The Fed’s policies have historically influenced Bitcoin’s price, as asset prices are closely tied to the liquidity provided by US dollar monetary policy, indicating that a recovery in Bitcoin's price may be feasible if global liquidity improves.

Source 🔗