The Federal Reserve System will officially put an end to a two-year period of quantitative tightening tomorrow. As of December 1, the Fed’s balance sheet is fixed at $6.57 trillion after a reduction of $2.39 trillion. For financial markets, this is a signal that many participants call the most important event of late 2025.
In the crypto industry, this move has already been compared to 2019, when the QT pause coincided with a liquidity reversal and subsequent growth of bitcoin and altcoins. This time, the backdrop includes lower rates, an increase in the money supply, and depleted reserves in the banking system — a set of factors that could change the dynamics of risk assets in a matter of weeks.
The Fed Stops Balance Sheet Reduction — The System Moves to a Mode of Constant Support
The market received confirmation: the Fed stops allowing its securities to mature without replacement. From this moment, the balance sheet stops shrinking.
The regulator was forced to take this step after several months when liquidity pressures became too tangible. Bank reserves dropped to $3 trillion, and the reverse repo mechanism, which had held up to $2.5 trillion in free funds for two years, was almost depleted.
October became a turning point. The secured funding market rate jumped to 4.25%, exceeding the Fed’s target range, and the Standing Repo was used for $18.5 billion in a single operation. The system showed its breaking point.
Now the Standing Repo turns from an ’emergency tool’ into a daily channel for supplying liquidity. Researchers are already calling this a new phase — the ‘era of permanent repo.’
Parallels with 2019 and Possible Effects
Analysts note: the end of QT often coincides with local market lows and subsequent recovery. In August 2019, the end of tightening was one of the factors in the reversal of major digital assets.
The set of signals now is similar:
- Bitcoin maintains dominance below 60%
- Global M2 money supply is growing and traditionally leads BTC movement by 2–3 months
- Liquidity can increase at a pace of up to $95 billion per month
- The gold price is hitting new highs — and bitcoin usually catches up with a lag of about 12 weeks
If the Fed formally announces the end of QT on December 1, the crypto market will receive its first clear signal of a liquidity barrier being lifted in two years.
Uncertainty Factor: December Meeting and Unreported Inflation
The market found itself in an unusual situation. Due to a 43-day US government shutdown, statistical agencies did not publish two months of inflation data. The Federal Open Market Committee will have to make a decision almost blindly.
Currently, CPI is estimated at 3%, which is above the Fed’s target. However, expectations for a new rate cut on December 10 have already risen to 85%. Treasury Secretary Scott Bessent previously confirmed that after the October 25 bp move, the committee is ready to consider further easing.
With government debt above $36 trillion and annual payments exceeding $1 trillion, the Fed is increasingly supporting the Treasury market, which indirectly strengthens the effect of liquidity returning.
The Market Discusses Two Scenarios
Crypto analysts differ on the timing of the reaction but agree on the main point: the formal end of QT removes one of the key restrictions on growth.
Some experts believe the rebound will begin immediately after December 1. Others are betting on a short altseason wave in January–February and a more pronounced cycle in 2027–2028.
The focus remains not on the halving or news narratives, but on liquidity movement. Historically, it is liquidity that has driven the crypto market: the peaks of 2017, 2021, and the early growth of 2025 were accompanied by an expansion of the money supply.
A New Stage Begins Tomorrow
The Fed emphasizes that it is ready to change rate parameters based on incoming data. But the end of QT remains a fact — and this is a structural shift.
Now investors will have to monitor three key indicators: the direction of interest rates, actions in the Treasury market, and M2 dynamics.
December 1 could become the point after which markets start to price in the return of liquidity. Even if this initially leads only to a small rally, such moments in the past have laid the foundation for much larger cycles.
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