The Federal Reserve Officially Halts QT: Analysis of Its Impact on the Cryptocurrency Market

Source: TokocryptoBlog
Original Title: Official: FED Stops QT, What Is the Impact on the Crypto Market?
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The Federal Reserve has just officially ended its Quantitative Tightening (QT) policy as of December 1, 2025. This policy, implemented since 2022, involved shrinking the Fed’s balance sheet by selling assets and not renewing maturing bonds.

With the Fed’s balance sheet now frozen at around $6.57 trillion, this move is expected to increase capital flows into risk assets, although it does not directly mean new money printing as in the Quantitative Easing (QE) era.

With the end of QT, liquidity is expected to gradually increase through bond reinvestment, potentially injecting up to $95 billion into the market each month. This could weaken the dollar, lower borrowing costs, and spur bank credit expansion. Stock markets like the S&P 500 and cryptocurrencies are expected to potentially set new records, as growth assets benefit from this liquidity surge.

However, as noted by an investment management firm, the fact that the Fed’s balance sheet remains above pre-pandemic levels may support long-term stability but also poses risks if inflation rises again.

The Impact of Ending Quantitative Tightening (QT) on the Crypto Market

On December 2, 2025, Bitcoin recorded a gain of over 7%, breaking above $90,000. This surge is believed to be driven by several factors, including: the end of QT, a $13.5 billion liquidity injection from the Fed—the second largest since Covid, expectations of a possible rate cut in December (with a 90% probability), and supporting factors such as increased institutional participation, with a leading asset management firm opening the door to crypto ETF trading (BTC, ETH, XRP, and SOL).

Many analysts predict that the end of QT could serve as a catalyst for a crypto supercycle, similar to the rebound in altcoins seen during 2019-2022 when QT was halted.

However, according to historical data, the Fed stopping Quantitative Tightening (QT) does not necessarily act as a positive catalyst for the crypto market.

For example, when QT ended in October 2019, crypto assets actually underwent a significant correction, dropping about 42%, indicating that simply ending a liquidity tightening policy is not enough to trigger capital flows into risk assets like crypto.

A massive rally did not occur until March 2020, when the Fed launched Quantitative Easing (QE) in response to the pandemic, flooding the market with liquidity.

For altcoins, with the end of QT, many claim that altcoins will outperform Bitcoin, based on the historical pattern seen at the end of QT in 2019, when altcoins experienced a rebound.

Analysts have highlighted this trend, with the end of QT serving as a signal for rotation into higher-risk assets like altcoins, potentially triggering an altcoin season.

Despite the many bullish narratives with the end of QT, if December’s PCE inflation data or jobs report shows an unexpected increase, the Fed may take a hawkish stance again, sparking volatility and corrections.

Moreover, the end of QT does not automatically mean QE, with central banks injecting massive liquidity into the market. Therefore, crypto investors need to read global macro dynamics more carefully before making investment decisions, including the direction of Fed policy, liquidity conditions, and market sentiment.