The moment to test the purity of chives has arrived!
The recent pullback has caused many chives to give up, which is akin to falling in the last moments before dawn! Why?
Because on December 1, the quantitative tightening (QT) that began in 2022 officially announced its end after more than 3 years!
Many chives do not know what QT is. Simply put, it is the Federal Reserve's process of taking back the printed dollars and then destroying them, artificially creating a scarcity of dollars, thus enhancing the value of the dollar and maintaining its relatively strong currency value.
Over the past three years, QT has reduced the Federal Reserve's balance sheet (printed dollars) from a peak of about 9 trillion to around 7 trillion, artificially destroying approximately 2 trillion dollars!
This operation is the most deadly contraction in the tidal waves of the dollar. The Federal Reserve reduces dollars, making the dollar relatively strong and appreciating, which suppresses domestic inflation and prevents the devaluation of the dollar. However, the cost is that economic activity is suppressed, the unemployment rate rises, and economic activity enters a slow period.
For the crypto market, when there is no water, it is naturally impossible to talk about rising.
Now that QT has officially ended, it indicates that the Federal Reserve's policy has begun a significant reversal. Combined with the risk of the U.S. entering a recession and the already high unemployment rate, if we want to restore economic vitality, we must open the floodgates. This can be seen from the dissolution of DOGE and Trump's locking in the next Federal Reserve chair!
Now is the darkest moment before dawn, but in any case, the Federal Reserve has only one path to follow: to release water again. Because if tightening continues, once entering a recession (like a certain country), no matter what kind of stimulus policies you implement at that time, it will basically be too late to turn the tide!
So in the short term by December, or at most by Q1 next year, the market will certainly show a clear direction, and liquidity will definitely continue to fill up. The only cost in the future is the risk of dollar devaluation. However, under the AI-driven industrial revolution, it is very likely that another economic miracle will occur, so those who hand over their chips at this time are pure chives, just as I said when it was around 50,000 to 60,000 dollars, you may never see that price again!
