On December 1st last year, the Federal Reserve finally hit the brakes on quantitative tightening (QT). The period of balance sheet reduction that started in 2022 has come to an end, and they even injected $13.5 billion into the banking system through overnight repos.

For the crypto market, this is like removing a huge weight from its shoulders. However, the market didn’t go crazy right away—it's still pretty fragile in the short term, with lots of volatility. But in the long run? Once liquidity loosens up, a new wave of gains is likely on the horizon.

**When there’s more money, it naturally flows to high-risk, high-reward assets**

During those QT years, about $2.4 trillion was drained from the financial system, putting a ton of pressure on risk assets like crypto. Now that QT has stopped and the Fed is injecting liquidity, where will the extra money go? Most likely into crypto. After all, this sector is extremely sensitive to changes in US liquidity.

Think back to 2019—the last time QT ended, Bitcoin soared from around $3,800 all the way to $29,000. That’s a textbook example of a liquidity-driven rally. Tom Lee from Fundstrat even said that Bitcoin could see a strong breakout in early 2026, and might hit new highs as soon as the end of January.

**What about altcoins?**

While major coins benefit, altcoins actually have even more room for value recovery. Previously undervalued projects could explode even harder than Bitcoin once the environment warms up and capital starts chasing higher returns. Of course, the project itself has to be solid—no pure hype or scam coins.

In short, this policy shift by the Fed is like a shot in the arm for the market. Don’t expect things to take off overnight, but in the medium to long term, the foundation for the next bull market is slowly being laid.