VirtualBacon, a seasoned trader, anticipates a significant shift in the crypto market. He suggests that the Federal Reserve’s move away from Quantitative Tightening (QT) could trigger a new surge, elevating Bitcoin and other cryptocurrencies.
The most crucial event for crypto this year might not be the Bitcoin halving or ETF approvals but rather the Fed’s liquidity changes. For over 18 months, the Fed has been shrinking its $7 trillion balance sheet to combat inflation. This process, known as QT, has reduced market liquidity, negatively impacting Bitcoin and altcoins.
Recent signals indicate QT might soon end, potentially restoring liquidity and sparking a new crypto rally. Major institutions like Goldman Sachs, Bank of America, and Evercore predict this shift by November or December, paving the way for market revival.
VirtualBacon highlights that every significant crypto bull run has occurred when the Fed increased liquidity. In 2019, increased money printing led to a Bitcoin price surge, tripling its value in months. When QT paused, altcoins also rose sharply. In 2022, when QT resumed, altcoins dropped. Now, in 2025, the situation resembles 2019, when Bitcoin’s price tripled.
When central banks inject more money, investors tend to favor riskier assets like crypto. The pattern is clear: more liquidity often leads to altcoin price hikes.
Current economic signals suggest a pivot may occur soon. Bank reserves are dropping, and stress in the repo market is growing. The U.S. Treasury added $800 billion to its cash reserves, temporarily reducing liquidity. This mirrors 2019’s “stealth QE,” where the Fed quietly added cash to the system.
The CME FedWatch tool indicates a 99.9% likelihood of a rate cut this month and an 87.9% chance of another in November or December, suggesting a shift toward easing.
VirtualBacon notes that Bitcoin hasn’t reached its peak yet, with no historical indicators triggering. He sees this as a mid-cycle phase, not the market’s top. With global M2 money supply increasing and gold leading, Bitcoin could soon experience a sharp rise.
If liquidity returns, VirtualBacon believes Ethereum, Solana, XRP, and BNB could surge first, leading another broad crypto rally.
FAQs
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What does the end of the Fed’s Quantitative Tightening mean for crypto?
It signals rising liquidity, which often boosts Bitcoin and altcoins as investors shift toward riskier assets. -
Why does liquidity have such a big impact on Bitcoin and altcoins?
When the Fed adds liquidity, money flows into risk assets like crypto, driving prices higher across major tokens.Download our App -
Could ending QT trigger the next crypto bull run?
Yes, many analysts believe more liquidity could ignite a new rally, similar to Bitcoin’s surge after 2019’s easing. -
How might the Fed’s upcoming rate cuts affect the crypto market?
Rate cuts lower borrowing costs and increase liquidity, creating a favorable environment for Bitcoin and altcoins to rise.
