Federal Reserve President Jerome Powell on Tuesday said the central bank could soon reach a point where its long -term program to reduce balance size had to end. Still, BTC continues to trade with the red with derivatives pointing to sustained Bearish atmosphere.
“Our long -standing plan is to stop the runoff of the balance when reserves are something above the level we judge in accordance with abundant reserve conditions,” Powell said in prepared remarks on his speech at the National Association for Business Economics Conference in Philadelphia.
“We may be approaching this point in the coming months, and we are closely monitoring a large number of indicators to inform this decision,” he added.
The so-called quantitative tightening (QT) began in 2022 to remove the extraordinary liquidity that Fed added to the financial system via balance extension during the Coronavirus crisis. Since then, the total size of Fed’s balance has dropped to $ 6.6 trillion from about $ 9 trillion.
Powell’s comments indicate that Fed does not want to shrink its balance so much that bank reserves – the funds banks have on the Federal Reserve – falling below a level that Fed considers “ample.” Staying over this threshold is crucial to avoiding disruptions in short -term financing markets and ensuring financial stability.
According to the chairman, it may be approaching that the central bank is carefully assessing market conditions, including recent increases in different accommodation rates.
The comments are coming as the markets expect two 25-base-point-fed interest rate reductions at the end of the year, after a reduction in similar size in September and has raised the bullish atmosphere on crypto-social media.
BTC not impressed
However, BTC is not impressed, nor the wider crypto market. From writing, the leading cryptocurrency traded with market value near $ 112,600, largely flat on a 24-hour basis.
Deriibit-listed settings tied to BTC showed a week’s puts offering downward protection, continued to trade with a prize for calls or bullish bets. Options out to the outlet in March 2026 showed a similar Bearish pricing.
It is perhaps the market’s way of reminding Crypto Bulls that a potential ending of quantitative tightening does not necessarily mean a quick start to a new balance extension program, just as under Covid that lubricated the Crypto Bull market.
In addition, the pace in QT slowed especially from mid -2024. Since April this year, the central bank has limited monthly redemptions of treasuries to $ 5 billion, while maintaining CAP for mortgage -backed securities for $ 35 billion. So the nearby end of QT does not necessarily signalize a significant bullish or Dovish surprise.
“The big takeaway from Powell’s speech today was that the QT program is likely to end soon. That is, Fed is likely to stop shrinking his balance in the coming months. The driving interest rate on this balance reduction was already very small, so it is not a huge change,” pseudonymous observer markets and chaos pointed out to X.
