The Impact of the Fed’s Monetary Policy on Cryptocurrencies: Novel Policy Implications for Central Banks

Tayfun Tuncay Tosun () and Erginbay Uğurlu
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Tayfun Tuncay Tosun: Department of International Trade and Finance, Istanbul Aydın University, Istanbul 34295, Türkiye
Erginbay Uğurlu: Department of Economics and Finance, Istanbul Aydın University, Istanbul 34295, Türkiye

JRFM, 2025, vol. 18, issue 7, 1-14

Abstract: This study aims to analyze the impact of the U.S. Federal Reserve System’s monetary policy on major cryptocurrencies. Specifically, it explores whether the effects differ between volatile cryptocurrencies, such as Bitcoin and Ethereum, and the stablecoin Tether. To this end, we utilize an autoregressive distributed lag (ARDL) bounds testing approach, analyzing monthly data from January 2019 to April 2025. The empirical results indicate that the responses of volatile and stable cryptocurrencies to the Fed’s monetary policy differ. In the long term, the prices of Bitcoin and Ethereum tend to react positively to the Fed’s monetary policy changes, whereas Tether’s prices experience a negative impact. We recommend novel policy implications in this study based on these empirical findings.

Keywords: bitcoin; Ethereum; tether; fed; ARDL model (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:18:y:2025:i:7:p:393-:d:1702390

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