🔥 BIG: Something important is shifting — and the wider financial system is reacting.
Here’s what we know so far 👇
1. The Fed has ended its balance-sheet shrinkage (QT).
The Fed announced it will stop reducing its securities holdings — i.e. end its “quantitative tightening” as of December 1, 2025.
That means it will no longer let bonds and mortgage-backed securities simply roll off its balance sheet — a key mechanism by which liquidity was being drained.
2. Short-term liquidity pressures are visible in money markets.
On October 31, 2025, U.S. banks used the Fed’s liquidity tools at “record levels.”
Also around that time, the Fed injected US$29.4 billion into the banking system via overnight repo operations — the largest such liquidity boost in more than five years.
Bank reserves — the cash held by banks at the Fed — have reportedly fallen to around US$2.8 trillion, a four-year low, which underscores tightening liquidity conditions.
3. The Fed (or at least some senior officials) are signalling changes — albeit technical ones.
According to a recent public statement, a senior Fed official suggested bond purchases may resume — not necessarily as a broad “QE-for-growth” program, but as a technical tool to maintain stable money-market conditions.
The shift from QT to balance-sheet stabilization reflects growing concern about short-term funding strains.
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Bottom line (what’s really happening):
The Fed has stopped shrinking its balance sheet — a major pivot in its monetary-policy stance.
Short-term money markets show signs of stress; banks are using Fed liquidity facilities at elevated levels.
The Fed appears ready to use its balance sheet more actively — though not necessarily full-blown growth-oriented QE —$BTC $
