Bitcoin's sensitivity to liquidity and Federal Reserve actions stems from its unique position as a decentralized digital asset. Unlike traditional currencies, Bitcoin lacks inherent value and relies heavily on market sentiment and liquidity for its valuation.
The #FederalReserve's monetary policies directly impact global liquidity levels, influencing investor behavior and risk appetite.
As Bitcoin is seen as a hedge against fiat currency depreciation, any tightening or loosening of monetary policy can trigger significant shifts in Bitcoin demand and supply dynamics, amplifying its sensitivity to liquidity fluctuations and FED actions.