Fed Minutes Confirm QT Is Ending
On Tuesday, February 19, the Fed released their minutes, revealing that the central bank is considering ending (or at least a significant slowdown) Quantitative tightening (QT). “Several participants suggested stopping or slowing down the balance sheet, waiting for the debt ceiling to be resolved,” the document states.
These remarks have sparked optimism among Bitcoin experts who view the potential end of QT as a bullish signal. Many people believe this is a pioneer of greater liquidity entering financial markets, a situation that has historically benefited risky assets from cryptocurrencies.
The newly published minutes confirmed that some Fed officials were concerned about the interaction between the ongoing balance sheet and the looming debt ceiling debate. Once the debt ceiling is resolved, the possibility of a large-scale U.S. Treasury issuance appears to be a key driver for suspending or stopping QT.
Related Readings
There is no clear shift to quantitative easing (QE), but acknowledging that balance sheets can reduce recognition is enough to make speculation in the digital asset circle. The minutes of the meeting must be Federal Open Market Committee (FOMC)further suggests intentional information from decision makers.
Impact on Bitcoin
Famous market commentator and host of margin podcast Felix Jauvin once on X, emphasizing the importance of the Fed signal, i.e. writing: “Here, QT is coming to an end this spring. It is intentional to remind every FOMC member that must unanimously approve these minutes.”
Although Jauvin emphasized the consistency behind these few minutes, he stopped predicting the immediate shift in vectorized easing. Instead, he pointed to specific events that the Fed appears to be navigating.
Compared to the initial rate, the Fed has cut the rate of balance sheet runoff in half. Hu also pointed out that the end of QT becomes more likely as the reverse repurchase facility (RRP) approaches zero, and the Fed’s target reserve level is about 3% of GDP.
Related Readings
And, attention is imminent Ministry of Finance General Account (TGA) Once the debt ceiling is resolved, it may be rebuilt, resulting in large amounts of bill issuance, which can lead to disruption to the funding market.
Therefore, Haowen believes that the Fed can seek temporary supplemental leverage ratio (SLR) exemption instead of vectorized easing breeding, allowing commercial banks to absorb additional government debt. “They are very, very, very far from any form of QE. Instead, they are more likely to adopt SLR exemptions to make commercial banks a marginal buyer of debt,” Jauvin predicts.
Jauvin concluded that a formal return to quantitative easing can only be achieved if financial and economic conditions are severely deteriorating, including major collapses in risky assets and the rate of falling to zero and close to zero. In response to X users, asking whether the end QT is optimistic without immediately indicating QE, Jauvin provides a concise explanation:
“So, given the current liquidity background, it improves slightly, as we may include the order of TGA reduction into QT, taking this as a possible SLR exemption, which is now. Quantitative easing should not even be in the current discourse. In the vocabulary. ”
Pentoshi, a well-known crypto analyst agreehighlighting the previously released forecast: “QT is over… My guess is that QT ends with the third quarter. With everything happening, Trump may eventually force it. The QT speculation on November 21 It’s right. Let’s see.”
He listed the conclusions of quantitative easing at the end of 2021 and the end of the running of the Crypto Bull. Now, market observers are keen to see whether the potential termination of QT will trigger momentum in Bitcoin and other digital assets.
At press time, BTC was trading at $97,208.
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