BTC Lags $75T Equity Market as Analysts Price In Fed ETF-Backstop Risk

Bitcoin is changing hands at $61,917.23, up 1.70% on the day, but the coin remains a laggard against the US equity market it may soon be pricing in as a policy risk. The Wilshire 5000 has grown 68% over five years and added roughly $6 trillion in value in 2026 alone, pushing total US equity market capitalization to $75 trillion — a size that analysts say now makes the market functionally “too big to fail” for the Federal Reserve.

That framing is driving a fresh round of crypto-liquidity speculation. Bitget Wallet chief operating officer Alvin Kan told Cointelegraph the scale of the equity market “gives policymakers a strong incentive to backstop major drawdowns,” and argued that any resulting monetary response — rate cuts, balance-sheet expansion or targeted ETF purchases — has historically pushed crypto into a “medium-to-long-term uptrend,” pointing to the 2021 cycle as precedent.

A precedent traders are pricing against

The base case for a Fed equity backstop rests on the 2020 playbook. During the COVID-19 shock, the central bank acquired $8.7 billion in corporate bond ETFs to act as a “buyer of last resort” and restore frozen credit-market liquidity. Bloomberg Intelligence’s Eric Balchunas said Tuesday there is “a good chance the Fed will buy equity ETFs in the next major downturn,” calling it a move that could “break decades of precedent” and become standard practice going forward.

Balchunas also noted that 58% of Americans hold equities directly or indirectly, meaning the political cost of a prolonged bear market extends well past Wall Street. He added that central banks in China and Japan already run indirect equity-ETF purchase programs through authorized intermediaries using public funds, and that the US could adopt a similar structure rather than direct Fed ownership of single stocks.

Crypto’s dollar-liquidity beta

HashKey Group senior researcher Tim Sun framed the transmission mechanism in terms of risk premium, not direct support. Crypto “will not receive direct backing from the central bank,” Sun said, but its macro pricing “remains fundamentally tied to US dollar liquidity, real interest rates, and equity market risk sentiment.” He argued that once markets are convinced a policy floor underpins risk assets broadly, the volatility premium demanded on assets like Bitcoin compresses, and “Bitcoin and mainstream crypto assets are poised to benefit significantly from improving liquidity expectations and a broader revival in risk appetite.”

Kan echoed that view, calling a Fed backstop “a more resilient macro backdrop” that is “ultimately bullish for crypto’s role as a growth and diversification asset in a world of expanding global liquidity.” Jeff Mei, chief operating officer at BTSE, was more cautious on the mechanism, noting that with inflation still elevated it is “difficult to see the Fed printing more money to stimulate” markets outright, though he said “other tools” remain available to policymakers.

Divergence to watch

The relevant data point for traders is the current gap: Bitcoin has underperformed US equities year-to-date even as the Wilshire 5000 posts a five-year 68% gain. That divergence sets up two competing scenarios for on-chain flows — a continued lag if the equity market avoids a serious drawdown and no Fed intervention materializes, or a re-rating of crypto’s risk premium if a backstop is triggered and dollar liquidity expands as it did in 2020-2021. Either path keeps Bitcoin’s near-term price action tethered to Fed balance-sheet signals rather than crypto-native catalysts.

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