Here's Why Bitcoin's Fate Still Depends on the Federal Reserve

As global liquidity tightens and investors search for new momentum in the markets, macro strategist Dan Tapiero believes the missing spark for crypto may lie not in the blockchain world itself — but in traditional monetary policy.

In the present economic climate characterized by tightening global liquidity and investors' keen interest in fresh market momentum, macro strategist Dan Tapiero proposes an intriguing perspective. He suggests that the missing spark for crypto may not be emanating from the blockchain domain but rather from traditional monetary policy.

During a recent appearance on the Milk Road podcast, Tapiero elaborated on his views, suggesting that the Federal Reserve's current restraint is suppressing what could otherwise be a breakout phase for Bitcoin and digital assets. While decentralized finance continues to grow and use cases for crypto multiply, he argues that this ecosystem still remains partly dependent on liquidity from legacy finance.

Tapiero highlighted what he sees as a growing mismatch. Fiscal policy is contracting sharply, but the Fed has not yet provided the monetary easing that would normally offset that pullback. With consumer demand softening and the dollar already weakening, he says the writing is on the wall — the current policy setup may be too restrictive to sustain growth.

Instead of letting the economy absorb the full weight of tighter government spending, Tapiero believes the Fed should be moving in the opposite direction to balance out the impact. “In a rational environment,” he implied, coordination between fiscal and monetary authorities would be key — but Powell’s hesitance has delayed that outcome.

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Despite the fundamentals of the crypto space looking strong — from rising DeFi activity to renewed interest in NFTs — Tapiero stressed that even a thriving blockchain ecosystem can’t fully detach from broader liquidity flows. When capital from traditional markets begins reentering the space, he believes the effects will be dramatic.

If monetary easing arrives as expected, Tapiero sees Bitcoin resuming its climb, possibly reaching his long-standing target of $180,000. He argues that the combination of favorable macro shifts and accelerating crypto innovation could trigger the next leg of the bull market, one that reaches far beyond just Bitcoin.

At the heart of his message is a broader thesis: the line between traditional finance and digital assets is not as distinct as many assume. As long as monetary policy dictates the flow of capital worldwide, crypto’s biggest rallies may still be rooted in decisions made at central banks.