Bitcoin Flat as Powell Signals End of Quantitative Tightening
Federal Reserve Chair Jerome Powell indicated Tuesday that the central bank may soon conclude its quantitative tightening (QT) program, but Bitcoin (BTC) remains largely unmoved, with derivatives reflecting continued bearish sentiment.
Powell said, “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions. We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.”
Since 2022, the Fed has reduced its balance sheet from $9 trillion to $6.6 trillion, removing emergency COVID-era liquidity. Powell emphasized the importance of keeping bank reserves above “ample” levels to prevent short-term funding disruptions and maintain financial stability.
Market Impact
Despite expectations of two 25-basis-point rate cuts by year-end, BTC traded near $112,600, nearly flat over 24 hours. Deribit options show puts priced above calls, highlighting persistent downside hedging.
QT has slowed since mid-2024, with Treasury redemptions capped at $5 billion and mortgage-backed securities at $35 billion per month, suggesting that the approaching end of QT may not trigger immediate bullish momentum.
Broader markets responded with the 10-year Treasury yield falling to 4%, the dollar index dipping to 98.75, gold climbing above $4,200/oz, and Nasdaq futures up 0.7%, reflecting easing monetary pressures.
