Bitcoin and crypto market sees recovery as Fed official says agency ready to stabilize market if necessary

• Boston Fed President Susan Collins said the agency will deploy tools to stabilize the market if liquidity concerns rise.
• Bitcoin reclaimed the $83,000 mark on Thursday following Collins' comments and a lower-than-expected PPI data.
• Ethereum, XRP and Solana also noted gains alongside Bitcoin.

Bitcoin (BTC) rallied 5% on Friday, trading just below $84,000 following Susan Collins, head of the Boston Federal Reserve (Fed), hinting that the agency could stabilize markets with "various tools" if needed.

Bitcoin and crypto reverse losses as Fed official hints at the agency's intervention

Collins stated in an interview with the Financial Times that the agency is prepared to deploy "various tools" to stabilize the market should liquidity concerns rise.

While an interest rate change is the natural expectation, she noted that the Fed could use other tools in its arsenal to address monetary policy.

"The core interest rate tool we use for monetary policy is, certainly not the only tool in the toolkit and probably not the best way to address challenges of liquidity or market functioning," she told the Financial Times.

Collins' comments follow rising signs of uncertainty in the bond market. Investors are ditching the 10-year Treasury Note — a benchmark for mortgages and other long-term loans — sending its yield to nearly 4.5% despite the risk-off sentiment in stocks.

When the Treasury markets seized up following the COVID-19 pandemic in 2020, the Fed intervened by buying government bonds to ease up yields and stimulate the economy. Bitcoin was trading around $5,000 during the period but immediately picked up after the intervention, with its price smashing past $60,000 one year later.

The crypto market reaction since Collins' comments indicates crypto investors are anticipating a similar Fed response if Treasuries continue plunging.

Bitcoin surged 5% on Friday, rallying past $80,000 to just below $84,000 at press time. The move reversed its more than 4% loss on Thursday from risk-off sentiments as global trade war concerns linger.

The top cryptocurrency lifted nearly every other coin in the top 30, with Ethereum (ETH), XRP, Solana (SOL) and Dogecoin (DOGE) gaining 3%, 2.5% 8% and 4%, respectively.

The positive move in crypto also follows the Producer Price Index — the measure of inflation for the prices of goods sold by domestic producers — falling 0.4% month-on-month, marking its largest drop since October 2023. This comes after the March's Consumer Price Index (CPI) data also came in lower-than-expected at 2.4% from 2.8% in February.