The Fed Signals End of QT Program, Crypto Markets Prepare for Return of Global Liquidity

The U.S. Federal Reserve has sent a strong signal that the era of balance sheet tightening—known as quantitative tightening (QT)—is nearing its end.
This indication has sparked a wave of optimism across global financial markets, including the cryptocurrency sector, which is known to be highly sensitive to changes in the Fed’s monetary policy direction.

The Fed Nears the End of Its QT Program

Federal Reserve Chair Jerome Powell, speaking at the National Association for Business Economics forum, stated that the process of balance sheet reduction “is approaching its final stage.” He emphasized that the central bank’s top priority now is to maintain money market stability amid signs of declining systemic liquidity.

Citing a report from Reuters, several major banks have revised their projections, estimating that the Fed may end its QT program before the end of 2025.
Rising stress in the repo market the short-term interbank lending market alongside growing liquidity demands, has become a clear signal that the Fed may need to slow the pace of tightening to prevent disruptions in financial markets.

Impact on the Crypto Market

The Fed’s potential shift toward easing its QT policy is seen as a positive development for risk assets, including cryptocurrencies.
An increase in U.S. dollar liquidity typically encourages investors to re-enter high-yield markets such as Bitcoin and Ethereum.

According to CoinDesk, although the crypto market has yet to see a significant surge, “the signal to end QT marks a pivotal turning point that could reopen capital inflows into digital assets.”

Opportunities and Risks

Analysts from KuCoin News believe that the end of QT could trigger a new bullish phase for the crypto market—especially if it coincides with a potential interest rate cut.
However, they also cautioned that risks remain, particularly if inflation rises again and forces the Fed to delay its easing measures.

Several key factors are expected to influence the policy direction going forward, including:

• Developments in U.S. inflation and unemployment data, which form the basis for interest rate decisions.

• The volume of U.S. government debt issuance, which could drain market liquidity.

• Global crypto regulations, which may either accelerate or hinder new investment inflows.

A Positive Signal but Caution Still Needed

The Fed’s indication of ending its QT program represents a positive shift for the crypto market, which has been under pressure for the past two years due to tight monetary policy.
If this move materializes, capital inflows into digital assets are likely to increase once again, with Bitcoin potentially leading the early rally phase.

Nevertheless, market participants are advised to remain cautious.
The direction of the Fed’s monetary policy will still heavily depend on broader macroeconomic dynamics, which remain fragile.
For crypto investors, every statement made by Jerome Powell and every signal of global liquidity change will serve as a critical guide for determining their next investment moves.