On December 1, 2025, the US Federal Reserve officially ended its quantitative tightening (QT), setting the stage for a new era in monetary policy. This cessation is seen by financial experts as a pivotal moment for various markets, particularly the crypto sector, as it signals the potential for increased liquidity and, ultimately, the next major rally in cryptocurrency prices.
As part of this shift, the Federal Reserve injected a staggering $13.5 billion into the banking system through overnight repurchase agreements—a move that ranks as the second-largest single-day liquidity operation since the onset of the COVID-19 pandemic. Notably, this injection also surpasses the peak repo operations recorded during the Dot-Com bubble, emphasizing the urgency and scale of this liquidity effort.
This recent liquidity operation highlights a pronounced demand for short-term funding within the banking sector. Analysts interpret this surge as a bullish signal for risk-on assets, including US equities and cryptocurrencies. With the Fed’s initiatives, many investors are now eyeing riskier markets like crypto as potential beneficiaries of this newfound capital flow.
Additionally, the official halt of QT comes after the Federal Reserve withdrew around $2.4 trillion from the financial system since the tightening cycle began in June 2022. This substantial drawdown ostensibly led to tighter liquidity conditions and market volatility, causing turbulence right before the Fed announced the end of QT. Nonetheless, the broader implications of this decision could pave the way for renewed investor confidence in cryptocurrencies.
In the wake of this policy shift, notable financial analyst Tom Lee from Fundstrat has expressed optimism regarding the future of the crypto market. He posits that the cessation of QT marks a crucial turning point and recalls that the last time the Fed ended similar tightening phases, markets rallied by approximately 17% within just three weeks. This kind of historical data often serves to bolster investor sentiment in times of uncertainty.
More specifically, Lee suggests that this newfound liquidity is particularly beneficial for Bitcoin. Historically, periods of improved liquidity tend to correlate with stronger performance in risk assets; thus, Lee is anticipating a strengthening of market conditions as the year comes to a close. He even goes so far as to predict that Bitcoin could reach a new all-time high by the end of January 2026, a tantalizing prospect for crypto fans.
As the market processes this new information, all eyes are turned toward the forthcoming Federal Open Market Committee (FOMC) meeting in December, where expectations for interest rate cuts are mounting. However, a counterpoint comes from market analyst Ted Pillows, who highlights growing speculation regarding a potential interest rate hike from the Bank of Japan (BOJ) during its own December meeting, with the odds climbing to 81%.
Historically, the BOJ’s rate increases—three of which occurred in 2024—have been accompanied by significant downturns in both Bitcoin and the broader crypto market. With the possibility of new rate hikes amidst domestic tightening measures, investors find themselves in a precarious position, weighing the potential benefits of increased liquidity against the overshadowing threat of rising interest rates in international markets.
In summary, the end of the Fed’s quantitative tightening program signals a critical juncture for both traditional and cryptocurrency markets. As liquidity conditions improve, many investors are eager to see how these changes will manifest in asset prices, betting on the potential resurgence of cryptocurrencies, particularly Bitcoin, as they pivot away from previous constraints.
For those wanting to delve deeper into this evolving situation, you can read the original article from Coinspeaker, authored by Bhushan Akolkar.
