"No matter whether the Federal Reserve is engaging in quantitative easing, the essence remains the same," economist Lyn Alden noted in her February 8 investment strategy newsletter. Her baseline outlook largely aligns with the Fed’s own projections: the pace of balance sheet expansion will roughly match the growth rate of total bank assets or nominal GDP. This suggests a model known as "gradual money printing" may already be underway.
Policy Interpretation
The Fed’s "gradual money printing" didn’t emerge out of thin air—it’s a key component of a recent series of policy moves. This process primarily involves digital operations, such as the central bank purchasing government bonds and other financial assets, injecting liquidity into the banking system.
In December 2025, the Fed lowered its benchmark interest rate to the 3.50%-3.75% range and announced the restart of a $40 billion monthly Treasury purchase program. The market widely interpreted this move as an effort to maintain financial system liquidity after ending balance sheet reduction.
Fed Chair Jerome Powell has repeatedly signaled a shift in policy focus. He emphasized that "employment risks outweigh inflation," indicating a pivot from prioritizing inflation control to supporting economic growth. Following the latest Federal Open Market Committee meeting, Powell acknowledged that "inflation risks remain tilted to the upside, while employment risks are skewed to the downside."
Market Expectations
Market expectations for the Fed’s next move are shifting. According to the CME FedWatch tool, only about 19.9% of traders expect the Fed to cut rates at the March meeting, down from 23% just a few days earlier.
With the Fed chair transition approaching, market uncertainty is mounting. Current Chair Jerome Powell’s term ends in May 2025, and President Trump’s nominee, Kevin Warsh, is seen as more hawkish than other candidates. This leadership transition casts a shadow over the direction of rate policy in 2026. Fidelity Investments notes that future market rate trends may be driven more by speculation about the new chair than by the steady flow of economic data.
Macroeconomic Impact
This "gradual money printing" environment has produced divergent effects across asset classes. Lyn Alden recommends investors continue to hold "high-quality scarce assets" while reallocating from overheated sectors to those that are underrepresented.
When interest rates are low and liquidity is abundant, investors tend to seek higher returns in riskier assets. This liquidity environment has traditionally supported investments like stocks and cryptocurrencies.
Veteran fund manager Larry Lepard also believes that the Fed’s balance sheet expansion since late 2025—primarily through reserve management rather than overt quantitative easing—is quietly injecting liquidity into the market. He specifically points out that this environment could benefit scarce assets like Bitcoin.
Crypto Market
This "gradual money printing" macro backdrop has far-reaching implications for the crypto market. Rather than decoupling from the broader economy, crypto is becoming more closely intertwined with macroeconomic trends.
The current market structure has fundamentally changed. There are now three distinct layers: regulated sectors (such as RWA tokenization and institutional custody), unregulated sectors (highly speculative areas), and shared infrastructure (like stablecoins and oracles). This segmentation has altered capital flows. In the past, when Bitcoin rallied, other cryptocurrencies would also rise through a trickle-down effect. Now, institutional capital entering via ETFs tends to remain concentrated in Bitcoin.
Asset Performance
Under the "gradual money printing" macro narrative, mainstream crypto assets are showing distinct performance characteristics. According to Gate data as of February 9, 2026:
The Bitcoin price rose 1.93% in the past 24 hours to $70,727, with a market cap of $1.41 trillion, accounting for 56.14% of the total market share. Ethereum’s price was relatively stable at $2,086.84, with a market cap of about $252.82 billion.
Market analysis indicates that Bitcoin may encounter resistance in the $71,000–$73,000 range, with support around $65,000–$62,500. If it can break through the key resistance zone at $75,000–$77,000, a path toward $80,000–$83,500 could open up.
Bitcoin’s market cap has climbed back above $1.41 trillion, while Ethereum’s market cap remains solid at $252.82 billion. Market segmentation continues: regulated sectors are steadily growing, while unregulated areas experience significant volatility. According to Gate trading data, Bitcoin’s 24-hour trading volume reached $800.96 million, with market activity remaining high. As the riskiest end of the risk curve, cryptocurrencies only fully benefit when liquidity flows downstream.
Powell’s "end of balance sheet reduction" stance has sent shockwaves through every corner of global financial markets. At the intersection of sweeping macro policy shifts and evolving market structures, the crypto market is undergoing a pivotal transformation—from wild, isolated swings to a new era of global systemic integration.
