Bitcoin's $100K Question: Fed Ends Tightening, But The Real Rally May Still Be Weeks Away
The Federal Reserve has officially concluded its multi-year quantitative tightening (QT) program, a move widely anticipated to inject fresh liquidity into financial markets and, by extension, fuel a significant rally in the cryptocurrency space. Despite this pivotal shift, Bitcoin's price has yet to break past the much-hyped $100,000 mark, leading many to question the immediate impact of this monumental policy change.
Policy Shift Meets Market Reality
The Fed has frozen its balance sheet at approximately $6.57 trillion, a substantial reduction of over $2.3 trillion since 2022. While Treasury runoffs have ceased, mortgage-backed securities will continue their slow decline. Historically, such a removal of liquidity constraints has been a bullish signal for risk assets, including cryptocurrencies. The expectation among many crypto investors was that this end to the "liquidity drain" would set the stage for healthier market conditions and propel Bitcoin beyond its current levels. Indeed, the broader crypto market has shown signs of bullishness, with a recent 7.2% surge over 24 hours led by Bitcoin, hinting at underlying optimism.
Lessons from 2019: A Delayed Reaction?
However, the immediate, explosive rally many anticipated for Bitcoin has been conspicuously absent. Benjamin Cowen of IntoTheCryptoverse offers a crucial historical perspective, noting that the end of QT doesn't instantly flood the system with new liquidity. During the last QT conclusion in 2019, the Fed announced its end by August 1, yet the balance sheet continued to shrink until mid-August due to pre-scheduled Treasury maturities. It wasn't until early 2020 that Bitcoin truly embarked on an explosive bull run, surging from around $3,800 to $29,000 over the next 18 months. This suggests that the real "relief" in liquidity may not manifest immediately.
The Path to $100,000: A Test of Patience
If history serves as a guide, the Federal Reserve's balance sheet could continue to subtly decrease for several more weeks, despite the official cessation of quantitative tightening. This delay implies that the significant surge in fresh liquidity might not fully impact the market until early 2026. Consequently, traders hoping for an immediate push beyond $100,000 for Bitcoin might be premature in their expectations. While the tightening phase is over, the full recovery in market liquidity and its subsequent effect on asset prices, particularly in the crypto realm, appears to be a gradual process that has yet to truly begin. The journey to new all-time highs for Bitcoin might demand more patience than currently anticipated.
