The correlation between Bitcoin price and the Federal Reserve's balance sheet has been a topic of interest. Historically, an expanding Fed balance sheet, often tied to quantitative easing, increases liquidity, benefiting risk assets like Bitcoin. For instance, during 2020-2021, as the Fed’s balance sheet grew by trillions, Bitcoin surged, suggesting a positive correlation. Analysts note that this expansion dilutes fiat currency, driving interest in Bitcoin as a hedge. However, the relationship isn’t always consistent—Bitcoin’s price can decouple due to market sentiment or regulatory shifts. In 2022, as the Fed tightened policy and reduced its balance sheet, Bitcoin faced pressure, indicating sensitivity to liquidity changes. While correlation exists, it’s not absolute, with macro factors and investor behavior playing key roles in Bitcoin’s price dynamics.