QT has ended.
But money is still tight.
——The liquidity truth you need to understand.

Imagine your home’s water supply has been turned off for three years.

Every month, the water from the faucet decreases.
You have to queue for showers, and use water sparingly for plants.
Even flushing the toilet has to be timed.

Finally, one day,
the property management notifies you:
"Good news, we are no longer turning off the water!"

You excitedly turn on the faucet
——only to find that the water pressure is still very weak.
This is the real state of the global financial market now.

Three years of withdrawal have finally stopped.
Starting from June 2022,
the Federal Reserve initiated an epic
"Water Withdrawal Action" - Quantitative Tightening (QT).

⁉ What is QT?
In simple terms:
The Federal Reserve has a pile of U.S. Treasuries and mortgage-backed securities,
and after they mature, they will not buy new ones,
allowing these assets to naturally disappear,
and money is withdrawn from the financial system.

In three years,
$2.4 trillion has evaporated from the market 💢

You can think of the financial market
as a huge swimming pool,
QT is like a drain opening at the bottom of the pool,
and the water level keeps dropping.

The stock market is turbulent, cryptocurrencies are crashing,
emerging market currencies are depreciating
— none of this is coincidental,
but because the water in the pool is getting less.

On December 1, 2025,
the Federal Reserve finally announced: the drain is closed 🚦

QT officially ends 🙏
Logically, this should be good news, right?
But why is money still so tight?
That's the most puzzling part.

Although QT has stopped,
the "tension" in the market has not disappeared.

The most obvious signal is:
The Federal Reserve's emergency repurchase tool
usage skyrocketed to $26 billion,
the second highest since 2020.

⁉ What does this number mean?
To put it another way: even though your house no longer runs the water,
the water pressure is still very low,
so low that you have to run to the property management to borrow
"emergency water bucket" to use.
If you only borrow occasionally,
that's no big deal; but if you have to borrow every day,
and the amount borrowed keeps increasing,
that means— the system itself is still short of water.

The Federal Reserve is also very clear:
The reserves of the banking system are nearing a dangerous lower limit.
A little less,
and the entire financial system's "water pipes" might burst,
just like the repurchase market crisis in 2019.

So, although QT has stopped,
the market has not become loose.
In summary:
The drain is closed,
but the water level is still very low,
and everyone is scrambling for water.

What will happen next ⁉
The Federal Reserve's "new actions"

Since the water level is too low,
what the Federal Reserve will do next is clear:
Start adding water to the pool 🎁

But this time it's not like 2020, printing money wildly (QE),
but more precise and restrained "targeted replenishment".

How specifically will it be done ⁉
The Federal Reserve will purchase
about $40 billion in short-term Treasury bills each month
— $20 billion directly purchased,
another $20 billion comes from reinvestment of maturing mortgage-backed securities.

It's like the property management no longer completely releases water,
but will periodically add a little water to your water tank,
to ensure it is basically enough.

Sounds good, right?
But here's the problem: is the added water enough?

The market faces a dilemma:
Treasuries have buyers, but mortgages have none.

The Federal Reserve's "replenishment" strategy
will create a very interesting situation:
On one side, the supply and demand in the Treasury market improves
— because the Federal Reserve will buy a lot of short-term Treasury bills,
greatly reducing the amount needed to be absorbed by other buyers in the market.
This is good news for Treasuries.

But on the other side, the mortgage-backed securities market will be crushed
— the Federal Reserve has $2 trillion in mortgage-related securities maturing,
which will not be held after maturity but will all flow into the market.

Imagine, there used to be a big buyer (the Federal Reserve)
who would buy mortgage-backed securities every month,
now this buyer suddenly says:
"I won't buy anymore, you all handle it yourselves."

The result is:
The mortgage market is under immense pressure,
financing costs are rising,
which may ultimately transmit to the real estate market.

That's why many analysts say,
even though QT has ended,
the overall liquidity outlook remains complex.

What does this mean for ordinary investors ⁉
If you are trading stocks, dealing with cryptocurrencies,
or caring about asset prices,
what does this turning point mean for you?

🚩1. The wind has changed, but it hasn't turned immediately
QT ending ≠ market immediately surges.

It's more like changing from "riding against the wind" to "the wind has stopped."
You won't suddenly fly up,
but at least you won't be blown around anymore.

In the past three years, all risk assets have struggled against the wind.
Now the wind has stopped, at least the direction is no longer blowing downward.

🚩2. The liquidity turning point always leads the price turning point
Historical data is very consistent:

Stopping balance sheet reduction in 2013 → risk assets began to warm up
Stopping balance sheet reduction in 2019 → stock market and Bitcoin entered a strong cycle
Stopping balance sheet reduction in 2025 → ?

Every time a liquidity turning point appears,
the real price increase often begins months later.

The problem for most retail investors is:
waiting until prices rise to think about entering,
but by then the turning point has long passed.

🚩3. Cryptocurrencies and technology stocks are the most sensitive

Why are cryptocurrencies and tech stocks most sensitive to this news?
Because they are the assets most sensitive to liquidity.

You can think of cryptocurrencies as the "weather vane" of the financial market
— when liquidity tightens, they drop first;
when liquidity loosens, they rise first.

The violent drop in the cryptocurrency market over the past three years,
the core reason is not that the projects are failing,
but that QT has drained the liquidity.

Now that QT has stopped,
even though the water level has not fully recovered,
at least it is no longer continuing to drain.
For the cryptocurrency market,
this is not "good news",
but a change in the underlying logic.

⚠⚠⚠ Three mistakes retail investors are most likely to make
I have seen too many people make the same mistakes at this turning point:

💢 Mistake 1: Waiting for the market to surge before thinking about entering
But the liquidity turning point always appears before the price rises.
By the time you see the price rise,
smart money has already completed its positioning.

💢 Mistake 2: Only focusing on prices, ignoring macro
Retail investors like to look at K-lines and news,
but institutions allocate based on liquidity.
If you don't understand macro, you'll always be one step behind.

💢 Mistake 3: Getting scared away by short-term volatility
QT ending does not mean the market will immediately rise unilaterally.
In the coming months, there will still be volatility, corrections, and panic.

But those who truly make big money,
are the ones who patiently lay out at the liquidity turning point,
not those who chase highs and sell lows.

This is a quiet turning point
The Federal Reserve stops QT,
is not explosive news.
It won't trend on hot searches,
won't flood the screens,
and many people might not even know about it.

But it is that kind of most important news
— quietly,
but changing the direction of the entire cycle.

Three years of tightening has ended.
The global capital landscape is beginning to change.
The starting point for risk assets to turn from headwinds to tailwinds has appeared.
In the next two to three years,
the most critical thing is not consolidation,
not corrections, not panic—
but whether you understand,
this cycle is crossing from "tightening" into a new stage.

The drain in the swimming pool is closed.
Although the water level is still very low,
at least it is no longer continuing to decline.
Now, it's about who can grab the best position,
waiting for the water level to slowly rise.

Thank you for reading the copy 🙏 hope it has helped you!
⚠️ Disclaimer
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and do not constitute any form of investment advice, invitation, or profit commitment.
Members should evaluate investment risks themselves and comply with relevant regulations.