The Fed Backstop: How a US Stock Market Rescue Could Fuel a Crypto Bull Run

Analysts suggest that the massive scale of the US equity market creates a powerful incentive for the Federal Reserve to intervene during major drawdowns. Should the Fed step in to support the $75 trillion stock market, the resulting surge in liquidity could provide a massive tailwind for the cryptocurrency market.

While the US equity market has surged 68% over the last five years, experts like Peter Schiff warn of an impending correction. A potential intervention involving the purchase of equity ETFs would break decades of precedent, injecting much-needed liquidity into the financial system and creating a prime environment for digital assets to thrive.

Crypto markets could stand to benefit significantly if the US central bank decides to backstop the US stock market. Alvin Kan, COO of Bitget Wallet, notes that the sheer size of the US equity market gives policymakers a strong incentive to prevent major drawdowns.

The US equity market is currently valued at $75 trillion and has added roughly $6 trillion in market value this year alone. However, with rapid growth raising fears of a major correction, analysts suggest the Fed might be forced to 'break decades of precedent' by buying equity ETFs. Such a move to increase liquidity would likely create a highly favorable environment for cryptocurrencies to rally.