Hu Jie, a former senior economist at the Federal Reserve and professor at Shanghai Jiao Tong University, highlighted potential shifts in Fed policy that could impact Bitcoin's liquidity. Speaking at a Huobi event, Hu noted that post-2008, the Fed's reliance on quantitative easing (QE) significantly influenced global asset pricing, including Bitcoin. With increasing Wall Street interest in crypto, Bitcoin's price is now more sensitive to global liquidity conditions.
Hu suggested that the new Fed chair might initiate a policy shift towards quantitative tightening (QT), reducing market liquidity. This could negatively affect risk assets like Bitcoin and U.S. stocks. He emphasized the importance of monitoring changes in the Fed's balance sheet. Despite short-term diversions of funds to tokenized stocks, Hu sees long-term potential for increased capital flow from traditional finance to the crypto market, benefiting Bitcoin and digital assets.
Former Fed Economist Hu Jie Warns of Liquidity Test for Bitcoin
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