Fed Stock Backstop Would Lift Crypto, Analysts Say
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- Federal Reserve could "break decades of precedent" by buying equity ETFs in a major correction, per Bloomberg's Eric Balchunas, mirroring its 2020 purchase of $8.7 billion in corporate bond ETFs as a "buyer of last resort" during COVID-19.
- US stock market is valued at $75 trillion, has grown 68% over the past five years, and added roughly $6 trillion in market value so far in 2025 — making it "too big and too important to fail," per Bitget Wallet COO Alvin Kan.
- Bitget Wallet's Alvin Kan said that when the Fed steps in with rate cuts, balance-sheet expansion, or targeted ETF purchases, crypto has historically entered a medium-to-long-term uptrend similar to 2021 as risk appetite returns and capital rotates into high-beta assets.
- American household stock ownership stands at 58%, per Balchunas, creating what he called powerful political pressure to prevent a prolonged bear market.
- HashKey Group's Tim Sun said crypto won't receive direct central bank backing, but its macro pricing remains tied to US dollar liquidity, real interest rates, and equity risk sentiment — meaning a policy floor under stocks would compress crypto's risk premium.
- BTSE's Jeff Mei cautioned that inflation remains high, making it "difficult to see the Fed printing more money to stimulate" markets — though he noted other policy tools remain available.
- China and Japan's central banks already use indirect equity ETF purchases through authorized intermediaries with public funds, per Balchunas, providing a precedent the Fed could follow.
Why it matters: If the Fed buys equity ETFs to backstop the $75 trillion market — a move Balchunas increasingly sees as likely — the resulting liquidity pulse would historically push capital into high-beta assets like crypto. The political math is straightforward: 58% of Americans own stocks, making a prolonged bear market electorally untenable and giving policymakers a powerful incentive to act.
