Federal Reserve Shifts to Gradual Money Printing, Says Lyn Alden
By John Nada·Feb 8, 2026·4 min read
Lyn Alden predicts a gradual money printing phase for the Federal Reserve, influencing asset prices and investor strategies amidst uncertain interest rate policies.
The Federal Reserve is entering a 'gradual' era of money printing, according to economist Lyn Alden, which will stimulate asset prices mildly. This shift marks a departure from the more substantial 'big print' many in the Bitcoin community were expecting. Alden aligns her forecast with the Fed's expectations, suggesting that the Fed will grow its balance sheet at a rate comparable to total bank assets or nominal GDP.
Alden's insights come amid market reactions to President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chairman. Traders reacted strongly, viewing Warsh as potentially more hawkish on interest rates than other candidates. The nuances of interest rate policy are crucial, as expanding credit through increasing the money supply is often bullish for assets, while a contraction can lead to economic slowdown and lower asset prices.
Currently, about 19.9% of traders anticipate an interest rate cut at the upcoming Federal Open Market Committee (FOMC) meeting in March, a slight decrease from previous expectations. This percentage reflects the uncertainty surrounding the Fed's monetary policy direction, especially with the looming leadership changes. Current Federal Reserve Chairman Jerome Powell has provided mixed signals regarding future interest rate policy, despite lowering rates multiple times in 2025. As Powell's term nears its end in May 2025, and with uncertainty surrounding Warsh’s confirmation, investors are left navigating a precarious landscape for interest rates in 2026.
Alden emphasizes that whether the Federal Reserve is engaging in quantitative easing is purely semantic, suggesting that all roads lead to debasement. This perspective highlights the ongoing debate within financial circles about the effectiveness and implications of current monetary policies. As the Fed plans to grow its balance sheet, the impact on inflation and asset prices will be closely scrutinized by investors, particularly those in the cryptocurrency space.
The Federal Reserve's M2 money supply, a critical measure of the money supply in the economy, continues to expand over time. This growth in M2 indicates an increase in liquidity within the financial system, which can lead to rising asset prices. Alden asserts that her investment strategy remains focused on high-quality scarce assets, indicating a preference for investments that can retain value amidst the broader economic fluctuations. Her strategy includes rebalancing away from extremely euphoric areas of the market, which may be due for a correction, and toward under-owned areas that present better value propositions.
As the Fed navigates this gradual money printing phase, the implications for various asset classes, especially cryptocurrencies like Bitcoin, could be significant. Historically, expansionary monetary policy has tended to support asset prices, including equities and digital currencies. This correlation between money supply and asset performance is particularly relevant in the context of increasing market volatility and changing investor sentiment.
Additionally, Alden's analysis comes at a time when investor sentiment in the Bitcoin market is shifting, with concerns about potential US government shutdowns and the implications of Fed policies contributing to a cooling in enthusiasm. The interplay between Federal Reserve actions and cryptocurrency prices is an area of growing interest, as traders seek to understand how changes in monetary policy will affect their investments.
The upcoming FOMC meeting in March will be pivotal, as traders closely watch for any signs of a rate cut or changes in guidance. The slight decrease in the percentage of traders expecting a rate cut indicates a cautious approach toward future Fed actions. As interest rate policies directly influence credit availability and thus the broader economy, the stakes are high for both traditional and digital asset markets.
In recent statements, Powell has highlighted the challenging nature of the current economic environment, noting that risks to inflation are tilted upward while employment risks are tilted downward. This duality presents a complex landscape for policymakers, as they must balance the need to stimulate growth while managing inflationary pressures. Alden’s perspective on this situation underscores the difficulty of navigating such a multifaceted economic climate.
As investors brace for the potential impact of Warsh's confirmation and the future direction of the Fed, the need for a strategic approach to asset allocation becomes ever more critical. Alden’s focus on scarce, high-quality assets suggests a defensive posture in the face of uncertainty, as market participants look to safeguard their portfolios from unforeseen economic shifts.
Monitor the developments surrounding the Fed's policies, as they will undoubtedly play a crucial role in shaping the investment landscape over the coming months. The gradual money printing approach that Alden describes may lead to a new set of opportunities and challenges for investors, particularly those engaged in the burgeoning cryptocurrency market. Keeping a close eye on these dynamics will be key for anyone looking to navigate this complex financial ecosystem effectively.