Core Insights - Billionaire investor Ray Dalio warns that the Federal Reserve's decision to halt quantitative tightening and resume balance-sheet expansion could lead to increased liquidity, benefiting gold and other assets like Bitcoin [1][2]. Group 1: Federal Reserve's Policy Shift - The Federal Reserve's announcement is seen as a significant shift toward easier monetary policy, despite being framed as a balance-sheet adjustment [2]. - Dalio emphasizes that the Fed's balance sheet expansion, combined with interest rate cuts and large fiscal deficits, could indicate a classic interaction between the Fed and the Treasury to monetize government debt [3]. Group 2: Impact on Gold and Other Assets - Dalio explains that when central banks buy bonds, it creates liquidity and lowers real interest rates, which can lead to financial asset inflation [4]. - Increased money creation is directly linked to gold's performance, as inflation and currency debasement typically drive up hard assets like gold [5]. - The higher the inflation rate, the more gold is expected to rise, as the supply of gold does not increase significantly compared to the increased supply of currencies [5]. Group 3: Broader Implications for Bitcoin - The liquidity from the Fed's balance-sheet expansion is likely to fuel financial-asset inflation, which could also positively impact Bitcoin [6]. - Former BitMEX CEO Arthur Hayes suggests that the Fed's quantitative easing could reignite the Bitcoin bull market, although some analysts caution that Bitcoin's technical setup remains fragile [6].