Fed’s Kashkari hints in Liquidity Support – are $ 100k Bitcoin back to the table?

Neel Kashkari, president of the Minneapolis Federal Reserve, talked to the issue of increasing treasury’s yield on April 11, suggesting that they could indicate a transfer to investor’s sentiment far from the U.S. government debt. Kashkari featured that the Federal Reserve has tools to provide more liquidity as needed.

While emphasizing the importance of maintaining a strong commitment to reducing inflation, Kashkari’s statements are a possible point for Bitcoin (Btc) investing amidst growing economic uncertainty.

The current 10-year harvest of the US government bond of 4.5% is not uncommon. Although it approached 5%, a level last seen in October 2023, this does not mean that investors have lost confidence in the Treasury’s ability to meet its debt obligations. For example, gold prices just exceed $ 2,000 in late November 2023, after reducing yields by 4.5%.

Is Fed Inject Liquidity, and is it positive for Bitcoin?

Raising yield often provides concerns about inflation or economic uncertainty. This is important for Bitcoin entrepreneurs because higher yields tend to make fixed investments more attractive. However, if these rising produce are seen as a sign of deeper systematic issues – such as avoiding confidence in government fiscal policies – killers -tao can turn to alternative hedges like Bitcoin.

Bitcoin’s trajectory depends more on how the federal reserve responds. Sili’s injection techniques Bitcoin prices are usually boosted while allowing higher yields can increase borrowing costs for businesses and consumers, which potentially slow down economic growth and negatively affect bitcoin prices in the short term.

One approach that the Federal Reserve can use is to buy long -term treasurys to reduce yields. To offset the liquidity added by bond purchases, the Fed can simultaneously perform reverse repos – breathing cash from banks overnight in exchange for security.

A weak US dollar and banking dangers can pump the price of bitcoin

While this procedure may temporarily stabilize yields, aggressive bond purchases may signal desperation to control rates. Such a signal can increase concerns about the Fed’s ability to effectively manage inflation. These concerns often undermine trust in The power of purchase of dollars And it can push investors towards Bitcoin as a fence.

Another potential approach involves providing low-interest loans through the discount window to give banks of immediate liquidity, reducing their need to sell long-term bonds. To count the injection of this liquidity, the Fed may impose more stringent collateral requirements, such as appreciating bond promises at 90% of their market price.

This alternative approach limits cash access to cash while ensuring that borrowed funds remain tied to collateralized loans. However, if the collateral requirements are too tight, banks may insist to get enough liquidity even with access to window loans.

Related: Bitcoiners’ ‘Bullish Impulse’ in retreat can be premature: 10x Research

Although it is early guessing which path the Fed will take, which will be given recent weakness in the US dollar next to a 4.5% yield yield, investors may not put full confidence in Fed actions. Instead, they can turn to safe properties such as gold or bitcoin for protection.

Ultimately, instead of focusing only on the US Dollar Index (DXY) or the US 10-year yield of Treasury, entrepreneurs should pay attention to systemic risks to financial markets and the spread in corporate bonds. As these indicators rise, trusting traditional financial systems weakens, which potential setting the stage for Bitcoin to recover the psychological $ 100,000 price level.

This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.