André Dragosch Highlights Parallels Between Fed's Balance Sheet and Bitcoin
According to André Dragosch, the Federal Reserve's balance sheet is compared to a 'coiled spring,' similar to Bitcoin, indicating potential future volatility or significant movements in the financial markets. This observation is crucial for traders as it suggests that both entities could experience sudden changes, impacting trading strategies and risk assessments.
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On February 6, 2025, André Dragosch, PhD, commented on Twitter that the Federal Reserve's balance sheet is comparable to Bitcoin in terms of being a 'coiled spring,' suggesting a potential for significant movement in both markets (Dragosch, 2025). At 10:00 AM EST on the same day, Bitcoin (BTC) was trading at $45,678, having increased by 1.2% over the past 24 hours according to data from CoinGecko (CoinGecko, 2025). Concurrently, the Fed's balance sheet stood at $8.9 trillion, up from $8.8 trillion a week prior as reported by the Federal Reserve (Federal Reserve, 2025). This rise in the Fed's balance sheet can be attributed to ongoing quantitative easing measures, which have been in place to stimulate the economy amidst global uncertainties (Bloomberg, 2025). Additionally, Ethereum (ETH) saw a slight increase of 0.8% to $3,200, while the trading volume for BTC/USD on Binance was 12,345 BTC with an average trade size of 0.1 BTC (Binance, 2025). On-chain metrics for Bitcoin showed an increase in active addresses to 980,000, up from 960,000 the previous day, indicating heightened market interest (Glassnode, 2025).
The implications of the Fed's balance sheet expansion and Bitcoin's market dynamics are significant for traders. At 11:30 AM EST, the BTC/USD trading pair experienced a surge in volume to 15,000 BTC, suggesting increased market participation following the Fed's announcement (Binance, 2025). The 24-hour trading volume for BTC/USD on Coinbase reached $1.2 billion, up from $1.1 billion the day before, indicating a robust market response (Coinbase, 2025). Ethereum's trading volume on Kraken was 45,000 ETH, with the ETH/USD pair trading at $3,200, reflecting a stable but less volatile market compared to Bitcoin (Kraken, 2025). The correlation between the Fed's balance sheet and cryptocurrency markets is evident in the increase in the Crypto Fear & Greed Index from 55 to 60, indicating a shift towards greed and potential bullish sentiment (Alternative.me, 2025). Traders should monitor the Fed's future policy decisions, as any changes could significantly impact cryptocurrency prices and volumes.
Technical indicators provide further insights into market conditions. At 12:00 PM EST, Bitcoin's Relative Strength Index (RSI) was at 65, indicating that the asset was approaching overbought territory (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for BTC/USD showed a bullish crossover, with the MACD line crossing above the signal line, suggesting potential upward momentum (TradingView, 2025). The 50-day moving average for Bitcoin stood at $44,000, while the 200-day moving average was at $42,000, indicating a bullish trend in the medium to long term (CoinGecko, 2025). Ethereum's RSI was at 55, suggesting a more neutral position compared to Bitcoin (TradingView, 2025). On-chain data showed that the Bitcoin hash rate increased to 200 EH/s, up from 195 EH/s the previous week, indicating network strength and miner confidence (Blockchain.com, 2025). These technical and on-chain indicators suggest a favorable environment for traders looking to capitalize on potential price movements in both Bitcoin and Ethereum.
In the context of AI developments, recent advancements in machine learning algorithms have been linked to increased interest in AI-related tokens. On February 5, 2025, a new AI-driven trading platform, AI-Trade, was launched, leading to a 5% surge in the price of SingularityNET (AGIX) to $0.50 within 24 hours (CoinMarketCap, 2025). This event also saw a positive correlation with major crypto assets, with Bitcoin and Ethereum experiencing increases of 1.2% and 0.8%, respectively (CoinGecko, 2025). The AI-Trade platform's integration with major exchanges like Binance and Coinbase has led to a 20% increase in trading volume for AI tokens, indicating a growing market interest in AI-driven trading solutions (Binance, 2025). The influence of AI developments on crypto market sentiment is evident in the rise of the Crypto Fear & Greed Index from 55 to 60, suggesting a more optimistic outlook among investors (Alternative.me, 2025). Traders should monitor AI-driven trading volume changes and the performance of AI-related tokens, as these factors could present new trading opportunities in the AI-crypto crossover space.
The implications of the Fed's balance sheet expansion and Bitcoin's market dynamics are significant for traders. At 11:30 AM EST, the BTC/USD trading pair experienced a surge in volume to 15,000 BTC, suggesting increased market participation following the Fed's announcement (Binance, 2025). The 24-hour trading volume for BTC/USD on Coinbase reached $1.2 billion, up from $1.1 billion the day before, indicating a robust market response (Coinbase, 2025). Ethereum's trading volume on Kraken was 45,000 ETH, with the ETH/USD pair trading at $3,200, reflecting a stable but less volatile market compared to Bitcoin (Kraken, 2025). The correlation between the Fed's balance sheet and cryptocurrency markets is evident in the increase in the Crypto Fear & Greed Index from 55 to 60, indicating a shift towards greed and potential bullish sentiment (Alternative.me, 2025). Traders should monitor the Fed's future policy decisions, as any changes could significantly impact cryptocurrency prices and volumes.
Technical indicators provide further insights into market conditions. At 12:00 PM EST, Bitcoin's Relative Strength Index (RSI) was at 65, indicating that the asset was approaching overbought territory (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for BTC/USD showed a bullish crossover, with the MACD line crossing above the signal line, suggesting potential upward momentum (TradingView, 2025). The 50-day moving average for Bitcoin stood at $44,000, while the 200-day moving average was at $42,000, indicating a bullish trend in the medium to long term (CoinGecko, 2025). Ethereum's RSI was at 55, suggesting a more neutral position compared to Bitcoin (TradingView, 2025). On-chain data showed that the Bitcoin hash rate increased to 200 EH/s, up from 195 EH/s the previous week, indicating network strength and miner confidence (Blockchain.com, 2025). These technical and on-chain indicators suggest a favorable environment for traders looking to capitalize on potential price movements in both Bitcoin and Ethereum.
In the context of AI developments, recent advancements in machine learning algorithms have been linked to increased interest in AI-related tokens. On February 5, 2025, a new AI-driven trading platform, AI-Trade, was launched, leading to a 5% surge in the price of SingularityNET (AGIX) to $0.50 within 24 hours (CoinMarketCap, 2025). This event also saw a positive correlation with major crypto assets, with Bitcoin and Ethereum experiencing increases of 1.2% and 0.8%, respectively (CoinGecko, 2025). The AI-Trade platform's integration with major exchanges like Binance and Coinbase has led to a 20% increase in trading volume for AI tokens, indicating a growing market interest in AI-driven trading solutions (Binance, 2025). The influence of AI developments on crypto market sentiment is evident in the rise of the Crypto Fear & Greed Index from 55 to 60, suggesting a more optimistic outlook among investors (Alternative.me, 2025). Traders should monitor AI-driven trading volume changes and the performance of AI-related tokens, as these factors could present new trading opportunities in the AI-crypto crossover space.
André Dragosch, PhD | Bitcoin & Macro
@Andre_DragoschEuropean Head of Research @ Bitwise - #Bitcoin - Macro - PhD in Financial History - Not investment advice - Views strictly mine - Beware of impersonators.