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The news at 2 a.m. flooded the screens—The Federal Reserve has stopped shrinking its balance sheet. How important is this signal?
Simply put, over the past three years, the Federal Reserve has been draining $95 billion from the market every month. Now, this "pump" has finally stopped. Starting December 1st, the balance sheet will cease to shrink, signaling the end of the tightening cycle of liquidity.
Don't get it wrong; this is not a new round of massive easing. Instead, the continuous draining of liquidity has halted—the water level in the pool will naturally gradually stabilize and even start to rise.
The market's intuition has always been sharp. Bitcoin surged at the start of 2026, re-establishing the $90,000 level. Ethereum also rebounded, returning above $3,100. Behind this synchronized rise is the market digesting the expectation of this "liquidity turning point."
Why did the Federal Reserve have to stop at this particular time? The reason is quite hardcore—the financial system is already on the risk boundary. The bank reserve ratio has fallen to around 12.2%, a number that makes industry insiders nervous because the 2019 "cash crunch" started at this level. Continuing to drain liquidity could really repeat history, causing chaos in the repo market again.
So, this policy shift is more of a passive adjustment forced by the market rather than an active move. For the crypto market, the liquidity turning point means the end of that passive bleeding situation.
Finally stopping the pump and dump, it was about time
Reserves at 12.2%... this number is indeed a bit concerning
Bitcoin's recent rally is nice, but I still think the rebound potential is limited
The so-called liquidity turning point sounds good, but in reality, it's probably just being forced into a corner
Instead of waiting for policy shifts, it's better to manage risks yourself
With the Fed taking a pause, let's see how many hidden mines are waiting ahead
Wow, $95 billion USD is drained monthly, no wonder these past two years have been so tough. Now that it’s stopped, we finally have a chance to breathe.
But honestly, this is more of a forced move, right? That 12.2% reserve ratio is indeed frightening. The lesson from 2019 is still there.
Look at BTC already stabilizing at 90,000, and ETH has also recovered. The market’s reaction doesn’t lie, just waiting for liquidity to gradually warm up.