- Trump’s nomination of Kevin Warsh for Fed Chair has introduced market uncertainty, with investors weighing his historically hawkish stance against recent comments supporting lower interest rates.
- Economist Lyn Alden predicts a “gradual print” era where the Fed expands its balance sheet by $20–$25 billion monthly to match GDP growth, providing steady rather than sudden liquidity.
- This environment of consistent liquidity is expected to favor scarce assets like gold and Bitcoin, which recently rebounded 2.8% to trade at approximately $71.1k.
President Donald Trump’s decision to name Kevin Warsh as the next chair of the US Federal Reserve has added uncertainty to markets, with some investors expecting a more hawkish policy stance than under other candidates.
Against that backdrop, economist Lyn Alden said the bigger story may be a slow return to balance-sheet expansion, not a sudden shift to aggressive easing. In her February 8 newsletter, Alden said she expects the Fed to grow its balance sheet gradually, keeping pace with growth in total bank assets or nominal GDP.
That approach would still add liquidity to the financial system, but in a steady way rather than through a large, one-time surge. Alden argued the Fed is more likely to expand progressively during a period of broader economic growth and rising banking activity, instead of rapidly increasing its balance sheet.
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A Better Environment For Bitcoin
Balance-sheet growth is often described as “money printing,” even though it largely happens through digital operations rather than physical cash. In practice, the Fed expands its balance sheet by buying assets such as government bonds, which injects funds into the banking system and tends to make credit easier to obtain.
Alden said this kind of environment generally supports scarce, store-of-value assets like, well, Bitcoin (BTC). She pointed to holdings that are limited in supply, including gold, certain equities, and other cryptocurrencies.
At the same time, she warned that parts of the market can become overheated, and said investors should watch for areas that remain undervalued or overlooked rather than chasing the most crowded trades.
Bitcoin is currently trading at US$71.1K (AU$101K), a 2.8% increase in the last 24 hours, according to CoinMarketCap.
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