Fed Kashkari suggests liquidity support: Are you back at the $ 100K Bitcoin table?

Neel Kashkari, president of the Federal Reserve of Minneapolis, addressed the issue of the increase in treasure performance on April 11, suggesting that they could indicate a change in the feeling of investors away from the debt of the United States government. Kashkari stressed that the Federal Reserve has tools to provide more liquidity if necessary.

While underlines the importance of maintaining a strong commitment to reduce inflation, Kashkari's comments indicate a possible turning point for bitcoin investors (btc) in the midst of a growing economic uncertainty.

The current 10 -year US government bond performance of 4.5% is not unusual. Even if you approach 5%, a level seen for the last time in October 2023, this does not necessarily mean that investors have lost confidence in the treasure capacity to fulfill their debt obligations. For example, gold prices only exceeded $ 2,000 at the end of November 2023, after the yields had already decreased to 4.5%.

Will Fed inject liquidity, and is this positive for bitcoin?

The increase in treasure yields often indicates concerns about inflation or economic uncertainty. This is crucial for bitcoin merchants because the highest yields tend to make fixed income investments more attractive. However, if these growing yields are perceived as a sign of deeper systemic problems, such as decorating confidence in government fiscal policies, investors can resort to alternative hedges such as bitcoin.

bitcoin's trajectory will depend largely on how the Federal Reserve responds. Liquidity injection strategies generally increase bitcoin prices, while allowing higher performance could increase indebtedness for companies and consumers, potentially slowing down economic growth and negatively impacting the price of bitcoin in the short term.

A strategy that the Federal Reserve could use is to buy long -term treasure to reduce yields. To compensate for aggregate liquidity through the purchase of bonds, the FED could simultaneously perform reverse rests: lend effective of banks during the night in exchange for values.

A weak US dollar and bank risks could pump the bitcoin price

While this approach could temporarily stabilize yields, aggressive bond purchases may indicate despair at control rates. Such signal could generate concerns about the Fed's ability to handle inflation effectively. These concerns often weaken the confidence in the purchasing power of the dollar and can push investors to bitcoin as coverage.

Another potential strategy implies providing low interest loans through the discount window to provide immediate liquidity banks, reducing their need to sell long -term bonds. To counteract this liquidity injection, the Fed could impose stricted collateral requirements, such as assessing the bonds promised to 90% of its market price.

This alternative approach limits the access of the cash to the cash while guaranteeing that the funds provided remain linked to guaranteed loans. However, if the guarantee requirements are too restrictive, banks may have difficulty obtaining sufficient liquidity even with access to window discount loans.

Related: Bitcoiners' bubble impulse “in the recession can be premature: 10x research

Although it is too early to predict which path will take the Fed, given the recent weakness in the US dollar along with a 4.5%treasure yield, investors may not make full confidence in the actions of the Fed. On the other hand, they can resort to safe assets such as gold or bitcoin for protection.

Ultimately, instead of focusing solely on the US dollar index (DXY) or 10 -year Treasury performance. UU., Operators must pay more attention to systemic risks in financial markets and spread On corporate bonds. As these indicators increase, trust in traditional financial systems weakens, potentially preparing the scenario so that bitcoin recovers the psychological level of prices of $ 100,000.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The points of view, the thoughts and opinions expressed here are alone of the author and do not necessarily reflect or represent the opinions and opinions of Cointelegraph.