The End of Quantitative Tightening: The Federal Reserve Injects $13.5 Billion.. Will the Crypto Market Start to Recover?
The crypto market has begun to recover after the Federal Reserve injected liquidity worth $13.5 billion into the banking system, marking the end of its last round of quantitative tightening (QT), which could support high-risk assets.
Quantitative tightening (QT) is a monetary policy in which the Federal Reserve allows Treasury bonds and mortgage-backed securities to mature without renewing them, reducing liquidity in the banking system. Stopping QT means a return of some of this liquidity to alleviate pressure on the financial system.
Tom Lee from Fundstrat believes that the end of QT could be a turning point for cryptocurrencies, noting that the last time the Fed halted this policy, markets rose by 17% over three weeks, according to a Coinspeaker report.
He adds that improved liquidity typically supports high-risk assets like Bitcoin, with expectations for continued improvement until the end of the year, potentially leading Bitcoin to a new record level by late January.
However, Mike McGlone from Bloomberg Intelligence points out that cryptocurrencies still vary compared to stock markets, and increased market confidence may carry some risks for high-risk assets.$BTC
