As the Federal Reserve navigates a gradual path of monetary expansion, investors increasingly view crypto markets through a macro lens. In a view echoed by Lyn Alden, a respected economist and Bitcoin advocate, the current regime is likely to spur asset prices in a measured way—enough to lift high-quality assets while avoiding the explosive rallies some on-chain enthusiasts once forecast. Alden argues the Fed’s balance sheet will grow roughly in proportion to nominal GDP, a framework that, she contends, supports a cautious reallocation toward scarce, resilient assets and away from crowded speculative bets. In this environment, Bitcoin (CRYPTO: BTC) remains a focal point for traders weighing how policy will ripple through liquidity and risk appetite.

The strategist’s stance sits against a backdrop of political and regulatory uncertainty shaping the Fed’s next moves. Alden’s February 2026 investment strategy newsletter suggests a continued emphasis on “high-quality scarce assets,” coupled with a strategic rebalance away from euphoric sectors toward areas that are under-owned but structurally robust. The broader context includes the ongoing debate about who will lead the Fed next, with market participants parsing how a potential chairmanship—whether Kevin Warsh or another figure—might tilt policy toward hawkish or dovish tendencies. The macro narrative is essential for crypto traders because interest-rate trajectories and liquidity cycles are historically linked to crypto price dynamics.

Historically, market outcomes hinge on the direction of credit and money supply. When policymakers expand credit by increasing the money supply, many assets—crypto included—tend to benefit in the near term. Conversely, a contractionist stance manifested through higher rates can dampen risk assets and compress prices. This duality informs current expectations: central banks have signaled a cautious, data-dependent approach, but investors remain vigilant for any signs that the balance sheet will outpace or merely keep pace with monitored economic growth. In late 2025, Powell pointed to a nuanced policy path, describing inflation and employment risks as two sides of a balancing act, and underscoring that policy carries no risk-free shortcut.

“Interest rate policy can influence crypto prices,” an established principle that investors continuously test. The flow of credit and the liquidity environment shape risk sentiment, and crypto markets—while diverse—are not insulated from such macro moves. The relationship between liquidity provision and asset prices remains central to how traders structure portfolios in the months ahead. Earlier this year, crypto observers noted how shifts in policy expectations could reprice risk, particularly for assets that benefited from prior rounds of monetary stimulus. A related analysis outlined how lingering policy ambiguity—especially around rate paths and balance-sheet expansion—can sustain volatility in the space.

Market observers have been tracking forward guidance and rate-path probabilities with particular attention to the upcoming FOMC decision window. Early signals suggested that a March rate cut was no sure thing, with traders estimating a roughly 20% probability of a cut at the next meeting, down from a prior reading near 23%. This shift reflects a broader re-pricing of risk as investors weigh the possibility that the Fed may remain cautious about inflation momentum and labor-market dynamics. The CME FedWatch tool has become a barometer for these expectations, showing a move toward pricing in steadier policy rather than aggressive easing.

At the same time, the policy backdrop remains unsettled. Powell, who leads the Federal Reserve, has faced questions about the speed and scale of future rate adjustments. Following the December FOMC meeting, he acknowledged that inflation risks appeared skewed to the upside in the near term, even as employment remained robust. With Powell’s term set to expire and Warsh’s confirmation still awaited by the Senate, investors must factor in the possibility that the committee’s consensus could shift as new data arrives. In such an environment, crypto traders increasingly view Bitcoin not merely as a speculative asset but as a potential hedge or cycle-levered instrument whose performance is tied to macro liquidity dynamics and the policy stance around money creation.

In the broader conversation about how policy affects asset prices, several interconnected themes emerge. First, the pace of balance-sheet expansion remains a critical variable; if the Fed continues to grow the monetary base in step with nominal GDP, the implication could be a gradual upward drift in risk assets, including crypto. Second, the market’s sensitivity to the chair’s temperament and the committee’s tightening or easing cadence means that any signals about policy discipline, inflation expectations, or financial-stability concerns can translate into intensified price movements across digital assets. Finally, the crypto space continues to wrestle with regulatory clarity and institution-building, which amplifies the impact of macro shifts on liquidity and diversification choices for investors.

Key takeaways

• The Fed is anticipated to maintain a gradual expansion of its balance sheet, aiming to grow in proportion to nominal GDP, a framework that could support broad asset prices without triggering extreme liquidity surges.
• Lyn Alden cautions that investors should rebalance away from euphoric sectors toward high-quality scarce assets, signaling a selective, value-oriented strategy for crypto holders.
• Market pricing for a March rate cut sits around 20%, down from prior levels, reflecting uncertainty about how inflation and employment data will unfold in the near term.
• Policy uncertainty, including the potential shift in leadership at the Fed, adds a layer of risk to crypto liquidity and risk sentiment in 2026.
• Crypto-price respond to money-supply signals, making Bitcoin a barometer for macro liquidity and policy expectations in the current cycle.

Tickers mentioned: $BTC

Market context: The macro backdrop remains characterized by ongoing liquidity considerations, policy guidance, and the broader risk-on/risk-off dynamic that has been shaping crypto markets as investors reassess long-term growth prospects and the trajectory of central-bank balance sheets.

Sentiment: Neutral

Price impact: Neutral. The policy path is seen as supportive for risk assets in a gradual way, but expectations for aggressive liquidity expansion have cooled, keeping volatility in check but not eliminating it.

Why it matters

For investors, the evolving policy framework matters because it defines the liquidity environment in which crypto markets operate. If the Fed sustains a measured expansion of its balance sheet alongside steady GDP growth, high-quality assets—often those with scarce supply or strong fundamentals—could outperform in a backdrop of resilient demand. Bitcoin, as the most mature cryptocurrency with significant liquidity and institutional interest, often reacts to shifts in money supply and policy expectations. The current outlook suggests a world where disciplined, data-driven decisions—rather than rapid-fire stimulus—could guide asset price trajectories, with crypto portfolios needing to adapt to changing risk premia and macro signals.

Builders and developers in the crypto space may also take cues from this macro environment. A more predictable policy path could reduce some downside macro risk, enabling longer-term experimentation and product development in decentralized finance, layer-1 ecosystems, and institutional-grade custody and liquidity solutions. Yet, the absence of a clear, easing-driven bull case could maintain a careful stance among investors who prize resilience and yield stability over speculative exuberance. In this setting, projects with robust on-chain economics, real-world utility, and sustainable governance could attract more durable capital, while speculative plays may experience more episodic volatility as market probabilities shift.

From a regulatory and institutional perspective, the interplay between central-bank signaling and crypto-market liquidity remains a focal point. If policymakers continue to emphasize cautious growth and gradual easing, the path of least friction for crypto institutions could involve deeper integration with traditional financial rails, enhanced risk controls, and clearer frameworks for custody, settlement, and reporting. The story remains dynamic, with policy, macro data, and market sentiment converging to shape the next phase of crypto adoption and price discovery.

What to watch next

• March FOMC outcome and the probability of a rate move, as reflected by CME FedWatch.
• Any new signals from the Fed about the pace of balance-sheet expansion and its relationship to nominal GDP growth.
• Nominal GDP growth data and inflation readings that could influence the committee’s guidance.
• Status of Kevin Warsh’s confirmation as Fed Chair and how leadership could influence policy tilt.
• Bitcoin price action in response to macro liquidity shifts and any notable shifts in institutional participation.

Sources & verification

• Lyn Alden’s February 2026 investment strategy newsletter (link to the original newsletter).
• Federal Reserve policy commentary and remarks by Chair Jerome Powell, including December FOMC statements.
• Market expectations for rates compiled by CME Group’s FedWatch tool.
• Related analyses on the impact of fed interest rates on crypto holders and investor sentiment pieces.

Fed policy signals, Alden’s outlook, and Bitcoin posture

Bitcoin (CRYPTO: BTC) sits at an intersection of macro policy and crypto market dynamics. Alden’s framework—favoring high-quality scarce assets and a measured reallocation away from speculative corners—suggests a patient, risk-aware stance for crypto investors. The notion that the Fed will pursue balance-sheet growth in line with nominal GDP implies a lingering but controlled liquidity environment, one that can support gradual asset price appreciation without igniting runaway inflation fears. In this context, BTC may benefit more from a steady money-supply backdrop than from sudden, outsized stimulus, aligning with a broader market preference for resilience and fundamentals. Readers can monitor the evolving policy narrative through linked discussions on Bitcoin’s price movements and broader crypto-market responses to rate expectations.

Powell’s cautionary framing—emphasizing no risk-free path for policy—highlights the asymmetry in policy outcomes. As the Senate weighs Warsh’s nomination, investors must weigh the likelihood of a hawkish tilt against the potential for cooler inflation readings later in the year. This balance matters for crypto liquidity, as a more cautious stance could prompt a shift in risk appetite, favoring assets with clearer on-chain utility and governance structures over more speculative bets. Taken together, the macro backdrop underscores the need for disciplined positioning, selective exposure, and ongoing scrutiny of liquidity signals as crypto traders navigate a landscape defined by gradual monetary expansion rather than rapid-fire stimulus.

US-headquartered companies captured 55% of Q4 crypto VC capital.

Crypto and blockchain venture capital witnessed a sharp rebound in Q4 2025, driven predominantly by large late-stage deals. Galaxy Digital’s report, authored by Alex Thorn, Head of Firmwide Research, found that venture capitalists deployed $8.5 billion across 425 deals in the quarter – an 84% increase in capital invested and a 2.6% rise in deal count compared to Q3 2025.

This represents the strongest quarterly investment in the sector since Q2 2022, although deal counts remain well below 2021-2022 levels.

Crypto VC Surge in Q4

Thorn reported that later-stage companies captured 56% of total capital invested, while earlier-stage startups accounted for the remaining 44%, a proportion unchanged from the previous quarter.

Eleven deals in Q4 raised over $100 million each, which collectively represented $7.3 billion, or roughly 85% of the quarterly total. The largest raises included Revolut at $3 billion, Touareg Group at $1 billion, and Kraken at $800 million.

Other prominent transactions included Ripple and Tempo at $500 million each, Erebor at $350 million, MegaHoot at $300 million, Rain at $250 million, EXUGlobal and TradeAlgo at $120 million each, and RedotPay at $107 million. Across 2025, venture capitalists invested a total of $20 billion into crypto and blockchain startups through 1,660 deals, making it the largest annual investment since 2022 and more than double 2023’s total.

The Trading/Exchange/Investing/Lending category remained the largest recipient of venture capital as it drew over $5 billion, led by Revolut and Kraken, while sectors including stablecoins, AI, and blockchain infrastructure also attracted notable investment.

Pre-seed deal counts remained healthy at 23% of total deals, which means continued entrepreneurial activity, while later-stage deal share has steadily increased as the sector matured. During this quarter, median pre-money valuations climbed to $70 million, and the median deal size reached $4 million. Valuation data existed for just 10% of deals, biased toward bigger, later-stage companies.

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Global Crypto VC

Geographically, 55% of capital went to US-headquartered companies, followed by the United Kingdom at 33%, Singapore at 2%, and Hong Kong at 1.7%. A similar pattern was seen across deal counts as well, with 43% completed by US companies, 6% in the UK, and 4% in Hong Kong.

Fundraising for crypto-focused venture funds reached $1.98 billion across 11 funds in Q4, which contributed to $8.75 billion raised for the full year, the largest since 2022. Average fund size rose to $167 million, with a median of $46 million.

TLDR:

• MegaETH launched with Chainlink integration, enabling immediate access to $14B in DeFi assets and protocols. 
• Chainlink’s oracle infrastructure powers 70% of DeFi markets with over $27 trillion in transaction value. 
• CCIP enables cross-chain liquidity for Lombard and Lido assets across MegaETH and other blockchain networks. 
• Aave and GMX protocols are now available on MegaETH through Chainlink’s data and interoperability standards.
  

MegaETH has joined the Chainlink Scale program and integrated Chainlink’s data and interoperability infrastructure at launch.

The collaboration provides immediate access to leading DeFi protocols, including Aave and GMX. Users can now interact with nearly $14 billion in flagship assets such as Lido’s wstETH and Lombard’s BTC.b and LBTC.

The integration went live on Monday, marking a strategic partnership between the real-time blockchain platform and the oracle network.

Chainlink Infrastructure Powers MegaETH’s DeFi Ecosystem

The integration brings Chainlink Data Feeds, Data Streams, and Cross-Chain Interoperability Protocol (CCIP) to MegaETH. These services enable developers to build high-performance decentralized applications on the platform.

The oracle infrastructure has facilitated over $27 trillion in onchain transaction value across the industry. Currently, Chainlink powers approximately 70% of existing DeFi markets globally.

MegaETH users gain access to multiple DeFi protocols through this partnership. Aave and GMX are among the prominent platforms now available on the network.

Additionally, HelloTrade and Avon have joined the ecosystem at launch. The integration creates opportunities for lending protocols, derivatives markets, and decentralized exchanges to operate efficiently.

The platform features a custom integration designed to deliver fast market data. This setup supports MegaETH’s objective of becoming the first real-time blockchain.

Developers can now build applications requiring accurate price feeds and reliable data sources. The infrastructure ensures consistency across various financial products and services.

CCIP enables secure cross-chain asset transfers for MegaETH users. Asset issuers like Lombard and Lido can provide liquidity across multiple blockchain networks.

The protocol offers compliance-enabled interoperability for developers building composable applications. This functionality extends MegaETH’s reach beyond its native ecosystem into broader multi-chain environments.

Scale Program Benefits and Industry Adoption

The Chainlink Scale program provides MegaETH developers with low-cost oracle services. Institutions building on the platform receive access to secure data infrastructure from day one.

Oracle nodes supply trusted information to support both traditional and decentralized finance applications. The program reduces barriers for teams developing on MegaETH.

Johann Eid, Chief Business Officer at Chainlink Labs, commented on the partnership’s scope. “MegaETH joining Chainlink Scale and adopting the Chainlink data and interoperability standards is a major moment for our ecosystem,” Eid stated.

He added that the infrastructure has enabled tens of trillions in onchain transaction value. The integration brings users access to protocols like Aave and GMX alongside key DeFi assets.

Stani Kulechov, Founder of Aave Labs, addressed the upcoming Aave launch on MegaETH. “The upcoming Aave launch on MegaETH with Chainlink live from day one will give users access to the high-quality data,” Kulechov explained.

He noted that Chainlink’s standards have been foundational to Aave’s multi-ecosystem growth. The integration enables seamless extension onto MegaETH’s next-generation blockchain platform.

Lei Yang, Co-Founder and CTO of MegaETH, outlined the strategic rationale behind joining Chainlink Scale. “Joining Chainlink Scale ensures that our developers have access to high-quality data and secure interoperability,” Yang said.

He emphasized the importance of providing developers with necessary tools from day one. The partnership supports MegaETH’s goal of becoming the leading blockchain platform in the industry.