Fed Balance-Sheet ’Gift’ Won’t Trigger Crypto Santa Rally, Says Whale’s Tradingview
The Federal Reserve resumed balance-sheet expansion while delivering another rate cut, a move that benefits equities, weakens the US dollar, and supports a sustained rise in gold and silver. BloFin Research argues that this macro backdrop does not automatically translate into a broad crypto rally. Because much of crypto trades as a dollar‑denominated, offshore, equity‑like asset class, precious metals and major stock indices are likely to attract investor risk capital ahead of most cryptocurrencies. Institutional investors see limited yield advantage in crypto: Bitcoin’s implied forward yield approaches T‑bond yields while Ether lags, reducing the incentive to increase long exposure. Recommendation: reduce outright crypto allocations, use far‑month put protection, and redeploy gains from strong equities (e.g., mega‑cap winners) to fund option premiums. Short‑term: the Fed’s liquidity support may provide episodic upside for top crypto names, but overall investor risk appetite and superior alternatives imply a muted, if any, Santa rally in crypto.
Bearish
The article frames the Fed’s balance-sheet expansion and rate cuts as more supportive of equities and precious metals than of most cryptocurrencies. Key points driving a bearish view: (1) Crypto competes with gold and stock indices for risk capital, and with the dollar weakening those traditional assets benefit immediately; (2) Institutional yield comparisons make crypto less attractive—BTC’s implied forward yield nearing T‑bond yields reduces carry advantage, and ETH lags; (3) Limited institutional liquidity injection and cautious risk appetite imply flows will favor established safe-haven or equity plays over speculative crypto positions. Historically, episodes of central-bank liquidity with tepid risk appetite have produced short-lived rallies in large-cap crypto (e.g., post‑QE pops) but failed to sustain broad market rallies without strong on‑ramp of retail/institutional demand (2018–2020 drawdowns and 2022 selloffs are parallels). Therefore, traders should expect episodic, top-heavy upside but higher probability of consolidation or declines for mid/low-cap tokens. Short-term implications: increased volatility and selective long opportunities in blue‑chip crypto; favor hedging (far‑month puts) and position sizing. Long-term implications: unless yield or fundamental adoption metrics change materially, crypto allocations may remain depressed relative to equities and gold.