Fed’s $2 Trillion Liquidity Will Reverse the Impact of Quantitative Tightening: JPMorgan

According to a JPMorgan strategist, the Federal Reserve (Fed) might inject $2 trillion liquidity into the market. So the big question is what will be the impact on

JPMorgan strategist Nikolaos Panigirtzoglou believes that the Fed might inject $2 trillion of funds into the U.S. banking system to ease the liquidity crunch. This is due to the collapse of Silvergate, Silicon Valley, and Signature bank in the last week.

Fed Liquidity Injection

According to Bloomberg, Panigirtzoglou wrote, “The Bank Term Funding Program should be able to inject enough reserves into the banking system to reduce reserve scarcity and reverse the tightening that has taken place over the past year.”

The Fed increased interest rates by 25 basis points in March 2022 for the first time since 2008. Since then, the Fed has been in an aggressive quantitative tightening mode. And the price of Bitcoin is down more than 42% from March 2022.

Will Bitcoin Push to $50,000?

When asked about the impact of the $2 trillion liquidity injection, Gaurav Dahake, the Chief Executive Officer (CEO) of crypto exchange , told BeInCrypto, “This is going to be net positive.”

But, he says, “It could get neutralized by the higher rates. It is not a zero-interest scenario right now. There is an FOMC meeting in March, so if it is coupled with no rate hike, then of course, it is going to be a massive push. If rate hikes continue, it will probably not have an extremely positive effect, but it would still be positive.”

Dahake adds, “Over time, it pushes Bitcoin over $50,000, and Bitcoin halving is about a year away now.”

There is a 26.2% probability of no interest rate hike at the next Federal Open Market Committee (FOMC) meeting.

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