US Fed Has Ended Quantitative Tightening, But Why Is The Bitcoin Price Still Below $100,000?
Overview
The Federal Reserve has concluded its multi-year quantitative tightening program, maintaining its balance sheet at approximately $6.57 trillion after a significant reduction of over $2.3 trillion since 2022. This decision has sparked anticipation within the crypto market, raising questions about Bitcoin’s price trajectory, particularly why it remains below $100,000 despite this pivotal shift.
The End of Quantitative Tightening
The Federal Reserve’s cessation of quantitative tightening (QT) marks a significant policy change, as it halts the rapid reduction of its balance sheet, which has tightened financial conditions throughout 2023 and 2024. The decision to freeze the balance sheet comes after a notable decline in bank reserves, which posed risks to short-term funding stability. The Fed’s action aims to prevent further liquidity drain, which has been a source of selling pressure in the crypto market in recent months.
Historically, the conclusion of QT has been associated with positive movements in the crypto sector. For instance, after the last QT ended in 2019, digital assets experienced a sharp recovery phase, with Bitcoin rising significantly over the following year and a half. Currently, the entire crypto market has shown signs of bullish behavior, with an increase noted in the past 24 hours, led by Bitcoin.
Current Market Dynamics
Despite the end of QT, Bitcoin has not yet achieved a price above $100,000, leading to speculation regarding the timing of market reactions. The cessation of QT does not immediately inject new liquidity into the market. Experts have drawn parallels to the 2019 scenario, where the Fed’s announcement to end QT did not translate into immediate market gains, as the balance sheet continued to decline due to prior Treasury maturities.
Market analysts suggest that the same situation may apply today, indicating that the actual uptick in liquidity could take weeks to materialize. This delay implies that traders anticipating a rapid return to high Bitcoin prices may be premature in their expectations.
Impact on the crypto market
- The end of quantitative tightening may lead to improved liquidity conditions over time.
- Historical patterns suggest that the cessation of QT can result in bullish trends for cryptocurrencies.
- Bitcoin’s current price stagnation highlights the complex relationship between monetary policy and market performance.
- Market participants are advised to temper expectations regarding immediate price surges.
- The crypto market has shown early signs of recovery, with a notable increase in market activity.
- Future price movements may depend on how quickly liquidity begins to flow back into the market.
Updated: 12/3/2025, 8:30:20 PM
