As Bitcoin (BTC) seems to be recovering from its recent downturn, observers for Wednesday’s Federal Reserve (Fed) decision to offer support, with some that say a message to end the balance of runoff program, known as quantitative tightening, could be positive news for the market.

Fed announces his rate review at 1 p.m. 18:00 UTC, followed by President Jerome Powell’s press conference half an hour later.

The bank is unlikely to offer any surprises on the interest rate and retains the current range of 4.25% to 4.50%. Therefore, the focus will be on how decision makers plan to continue with the quantitative tightening program considering the concerns that it may affect the liquidity of the system while the Treasury is struggling with the ongoing debt ceiling. Plus, the summary of financial projections will be monitored by markets.

Since June 2022, the Fed Under the QT program has slowly shrunk its balance, which had zoomed in to a record of $ 9 trillion after Covid when the bank bought trillions of dollars worth of assets, including bonds, to support markets.

The protocol from the FED meeting in January showed that decision makers discussed or slowed down the repentance of the balance, which smeared the crypto bull market in 2020-21. So the possibility that Powell suggests the same later today cannot be excluded.

“Late last year, Fed -President Powell suggested that the end of QT came in 2025. If he mentions it in tomorrow’s [Wednesday’s] statement or press conference (I can imagine naked Will ask him), it would end up signaling that we are in a new monetary regime and that Fed is ready to resume additional debt purchases if QE becomes necessary again, “said Noelle Acheson, author of Crypto, Macro Now Newsletter in Tuesday’s edition.

“While renewed QE [quantitive easing] It is unlikely that the extra liquidity of a large buyer (bold) coming back to the market to replace mature holdings would be good news, ”added Acheson, noting that the end of QT would be a timely step to avoid liquidity errors in the treasurer facing $ 9 trillion in debt equipment this year.

New York Life Investments’ economist Lauren Goodwin expressed a similar statement and said a slightly earlier end of balance could give the market a Dovish signal it is looking for.

Dealers of decentralized betting platform The polymarket sees a 100% chance that the Fed will complete the QT program before May. The bet at the same will solve in “Yes” if the central bank increases the amount of securities it has a direct week-over-week at the end of April.

Bank of America predicts the end of QT

Several investment banks, including the Bank of America, expect the Fed to end QT at a meeting characterized by uncertain financial views, mainly derived from President Donald Trump’s trading bariffer.

“Our rate strategists expect the statement to indicate that Fed pauses QT until the debt ceiling is resolved, as suggested in the meeting minutes in January. They do not expect to restart after the debt ceiling is addressed, but the message will not be published until later in the year,” Bank of America’s 14 March client note.

A break in QT could put a pressure down on the yield on the 10-year-old US Treasury note, the so-called risk-free rate that galvanizes the demand for more risky assets.

Take care of for stagflation tips

Trump’s tariff rates have Revved inflation risks, while posing risks of economic growth, a stagflationary situation and Fed’s summary of economic projections (SEP) could reflect it. A nod to stagflation can mean a delay in additional speed cuts, which potentially limits Bitcoin gains from a QT -break message.

According to Acheson, the chances of a stagflationary adaptation in SEP -lower GDP projections and higher core -pce -stimates, with several decision makers citing upward risks for inflation -high.

“If we actually get the stagflationary shift in official projections, the market is unlikely to be happy. To some extent, these will start to be priced in – but confirmation that Fed is likely to push cuts even longer could scare those counting on liquidity injections,” Acheson said.

The newly released US retail sales and regional manufacturing indices revealed signs of economic weakness, meanwhile, forward-looking inflation measurements have increased, which is probably adapted to Trump’s customs.

Bank of America expressed it best: “The combination of signal from the latest data and policies so far adopted should result in the fed downgrading growth and upgrading of inflation this year, a small nod to stagflation.”

“The dot plot still has to show two cuts in ’25 and ’26,” the investment bank added.