This general playbook is supported by crypto analyst Benjamin Cowen, who believes the end of QT will be followed by a broad market rally. Source: Benjamin CowenAlthough the Fed hasn’t confirmed whether it will wind down its QT program, the minutes of the January Federal Open Market Committee meeting revealed that some officials were concerned about balance sheet reductions impacting the government’s debt ceiling debate:“Regarding the potential for significant swings in reserves over coming months related to debt ceiling dynamics, various participants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of this event.”Important policy changes at the Fed are coinciding with a broad pickup in the business cycle.
Betters on Polymarket believe it’s now a certainty that the US Federal Reserve will wind down its quantitative tightening (QT) program by May of this year, a move many analysts say could trigger the next leg of the crypto bull market. By March 14, Polymarket’s betting odds that the Fed would end QT by April 30 was 100%, where it remains unchanged at the time of writing.
In addition to raising short-term interest rates, the Fed uses QT to raise long-term rates and drain excess liquidity from the market. Although the start of QT didn’t prevent stocks and crypto prices from rallying — these markets are coming off back-to-back years of impressive growth — it has become a bottleneck due to the recent macroeconomic shocks stemming from the Trump administration.
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