Quantitative Easing Explained: How It Works & Its Crypto Impact

Quantitative easing (QE) is a monetary policy tool where central banks buy financial assets, like government bonds, to inject liquidity into the economy and lower interest rates.

The central bank creates new money to buy assets, increasing cash flow in the economy. This encourages lending, investing, and economic growth while keeping borrowing costs low.

QE can lead to inflation if too much money enters the system without economic growth. It may also create asset bubbles and weaken fiat currency value over time.

As QE devalues traditional currencies, investors often turn to cryptocurrencies like Bitcoin as a hedge against inflation, increasing crypto demand and prices.

While crypto isn’t directly impacted by QE, its effects on fiat money influence investor behavior.