- Eric Balchunas says the Fed may buy equity ETFs to backstop market downturns.
- 55% of Americans now own stocks, with Trump Accounts set to add 28 million more.
- Sun said improving liquidity and lower risk premiums could boost Bitcoin and major cryptocurrencies.
The Federal Reserve may purchase equity ETFs to support the US stock market during the next major downturn, an analyst said, a scenario that crypto researchers say would indirectly benefit Bitcoin and major digital assets.
The Case for Fed Equity Purchases
Eric Balchunas, Senior ETF Analyst, published a note arguing that the US stock market has effectively become too large and too politically important to allow a prolonged collapse.
Approximately 55% of Americans currently own stocks, the highest rate in the world. Trump Accounts are set to bring an estimated 28 million additional people into equity ownership. Social security is projected to run out of funding within a decade. Together, those factors mean any extended bear market would inflict damage on a majority of American voters and create intense political pressure for intervention.
“The political pressure to keep stocks out of a prolonged bear market is going to be very powerful,” Balchunas wrote.
He added that Japan and China already use equity ETF purchases as a crisis tool, and that the Federal Reserve itself expanded its toolkit in 2020 to include corporate bond purchases, something previously considered outside its mandate. Each major crisis, he argued, has enlarged the definition of acceptable central bank action.
A survey of 1,000 people found that three in four expected the Fed to intervene in the next market crisis. Balchunas described that as evidence that investors are already positioning around the assumption, even if economists have not publicly adopted it.
The US equity market has grown 68% over five years and added approximately $6 trillion in market value so far in 2026.
Implications for Crypto
Bitcoin and crypto assets would receive no direct Federal Reserve support. Analysts said the indirect transmission, however, could be meaningful.
HashKey Group senior researcher Tim Sun said a prolonged severe bear market would do far more than reduce portfolio values, directly damaging consumer spending, pension fund stability, corporate credit markets, and government tax revenues.
Bitcoin’s price, Sun said, remains fundamentally linked to US dollar liquidity, real interest rates, and equity market risk sentiment rather than crypto-specific fundamentals alone.
Sun said that once investors become convinced that policy support effectively underpins risk assets, the risk premium demanded for highly volatile assets could decline. He added that Bitcoin and other major cryptocurrencies stand to benefit from improving liquidity expectations and a broader recovery in risk appetite.
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