Crypto Market News: Fed on Standby as Treasury Yields Rise and Liquidity Concerns Grow

Financial markets are experiencing fluctuations as Q1 2025 ends. With rising bond yields and policy changes creating waves, many are wondering: Will the U.S. Federal Reserve jump in to calm the storm? Boston Fed President Susan Collins gave some clarity: yes, the Fed is prepared to act, but only if things get out of hand.

The Fed Is Watching—But Not Worried Yet

Susan Collins recently said that the Fed is closely monitoring the situation. While markets have shown signs of stress, she made it clear that the current liquidity, that is, how easily assets can be bought or sold without causing big price changes, is still in good shape.

Collins reminded us that the Fed has acted quickly before, like during the 2020 COVID-19 crisis. And if something similar happens again, they’ll be ready with a set of tools to calm the market. These tools go beyond just changing interest rates, they have other ways to help if needed.

What’s Going on with Treasury Yields?

One of the concerns in the financial world right now is the sharp jump in the 10-year U.S. Treasury yield. It has gone up to 4.5%, a significant shift in the bond market. This change, combined with uncertainty caused by former President Trump’s new tariff announcements, is making investors nervous.

Some experts fear that the $29 trillion Treasury market might face instability. When yields rise like this, it becomes more expensive for the government to borrow money, which can create ripple effects across the economy.

Jamie Dimon’s Warning About Liquidity

JPMorgan Chase CEO Jamie Dimon also raised a red flag. He said that if liquidity continues to tighten, it could cause significant problems not just in the U.S. but around the world.

He pointed to banking regulations as one of the reasons liquidity might dry up. Specifically, he mentioned the need to adjust the supplementary leverage ratio for banks that hold Treasuries. Without changes, the Fed might have to step in again, as they did in 2020, to avoid a full-blown market issue.

Recession Worries Are Growing

Adding to the concern, Larry Fink from BlackRock shared his thoughts on where the economy might be headed. According to him, the U.S. could already be in a recession or close to one.

He believes the uncertainty caused by trade policies and tariffs is slowing economic growth. Still, Fink doesn’t think the financial system is going to collapse. It’s more about a slowdown than a crisis.

Bitcoin and Liquidity: A Surprising Connection

Interestingly, this liquidity story doesn’t just affect traditional markets. Bitcoin’s price, too, has been riding the waves of global liquidity. Studies from Kingston University show that changes in liquidity have played a crucial role in how Bitcoin moves, even more than its core network features.

So, as market players wait and watch the Fed, even crypto investors have their eyes on liquidity.

Final Thoughts

The bottom line? Things are tense but not broken. The Fed isn’t rushing in, but they’re standing by just in case. Whether it’s Treasury yields, hedge funds, or even Bitcoin, everyone’s hoping we don’t see a repeat of 2020. But if we do, the Fed says they’ll be ready.