The Federal Reserve officially ended its quantitative tightening (QT) on December 1, marking the beginning of a new phase in its balance sheet management. The market anticipates that the Federal Reserve may soon initiate "reserve management purchases" (RMP), injecting liquidity into the financial system by purchasing approximately $20 billion in short-term government bonds each month. Although this differs in purpose and scale from large-scale stimulus quantitative easing (QE), it may still have a significant impact on the market. $BTC $ETH
The recent persistent fear in the market can be seen as a fierce redistribution of chips. When most retail investors exit out of panic, it often signifies that the main funds are quietly absorbing the chips. Historical experience shows that the longer market sentiment is suppressed, the greater the potential for subsequent rebounds.
The current market is at a critical juncture where liquidity expectations are shifting and investor sentiment is at a freezing point. Understanding policy trends helps to see through the nature of market sentiment dynamics, while noticing the chip redistribution process behind the emotions is key to coping with market fluctuations.
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