By officially ending quantitative tightening (QT) on December 1, the US Federal Reserve began the first stages of a liquidity expansion. Market experts see this as a springboard for the next big crypto rally.
The US Federal Reserve injected $13.5 billion into the banking system via overnight repurchase agreements. This is the second largest single-day liquidity transaction since the COVID-19 crisis. This decision also exceeds the peak of pension injections recorded during the Dot-Com bubble.
This operation reflects an increased demand for short-term financing within the banking sector. This could ultimately bode well for risky assets such as US stocks and even the crypto market.
The Federal Reserve officially ended its quantitative tightening program effective December 1, 2025, marking a notable shift in U.S. monetary policy. The move comes after the central bank withdrew around $2.4 trillion from the financial system since the tightening cycle began in June 2022. However, just before the Fed officially ended QT, the crypto market faced a major pullback.
Fundstrat’s Tom Lee said the Federal Reserve’s decision to end quantitative tightening would be a turning point for the crypto market. Lee noted that the last time the Fed ended QT, markets rose about 17% in three weeks.
Additionally, Lee believes that this change is particularly relevant for Bitcoin.
as improved liquidity historically supports better performance of risk assets. He expects market conditions to strengthen by the end of the year and forecasts a potential new Bitcoin all-time high by the end of January.
After QT ends, everyone is eagerly watching the Fed rate cuts planned at the December FOMC. But on the other hand, market analyst Ted Pillows noted that the probability of a Bank of Japan (BOJ) rate hike at the December meeting has jumped to 81%.
The BOJ has raised rates three times during the current tightening cycle, in March 2024, July 2024 and most recently in January 2025. Pillows pointed out that each of these rate hikes was followed by a broad sell-off in Bitcoin and the broader crypto market.
Read original story US Fed Ends QT With $13.5 Billion Liquidity Pump, Is Crypto Market Recovering? by Bhushan Akolkar on Coinspeaker.com
