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Quantitative Easing (QE)

Quantitative Easing (QE) is a monetary policy tool employed by central banks to stimulate the economy when standard measures like lowering interest rates become ineffective.

In QE, central banks buy financial assets, usually government bonds, injecting newly created money into the economy. This process aims to lower long-term interest rates, boost lending, encourage spending, and foster economic growth. While QE can prevent deflation and stabilize financial markets, critics raise concerns about potential inflationary pressures and wealth inequality.

Regarding its impact on crypto markets, QE often leads investors to seek assets with higher returns, including cryptocurrencies. The influx of liquidity from QE initiatives can contribute to rising demand for digital assets like Bitcoin and Ethereum, potentially driving their prices higher.

Cryptocurrencies are viewed by some investors as a hedge against devaluation caused by excessive money supply, making them attractive during QE periods. However, the relationship between QE and crypto markets is complex and multifaceted, influenced by various factors such as market sentiment, regulatory developments, and global economic conditions.