Crypto Market Primed for a "Melt-Up" as Federal Reserve Signals Pivotal Policy Shift

A compelling forecast from market expert VirtualBacon suggests that the crypto industry's most significant event this year won't be the much-hyped Bitcoin Halving or the approval of new exchange-traded funds (ETFs). Instead, the looming shift in the Federal Reserve's liquidity policy, specifically a pause or reversal of Quantitative Tightening (QT), is predicted to ignite a substantial "crypto melt-up."

The Fed's Influence on Digital Asset Performance

After 18 months of rigorous quantitative tightening, the Federal Reserve is reportedly poised to halt its balance sheet reduction efforts and may even discreetly reintroduce quantitative easing (QE). This anticipated policy pivot has historically held profound implications for the altcoin market. Data reveals a clear pattern: when the Fed paused QT in 2019, altcoins experienced a significant rally. Conversely, when QT began in 2022, altcoin valuations reached their zenith, suggesting a direct correlation between the Fed's liquidity injections and the performance of alternative cryptocurrencies. As the Fed is expected to conclude QT in 2025, a similar surge for altcoins is widely anticipated.

Converging Signals Point to Imminent Liquidity Boost

This optimistic outlook is echoed by major financial institutions, including Goldman Sachs, Bank of America, and Evercore, all of whom project an imminent end to the Fed's QT measures. The CME FedWatch Tool further corroborates this sentiment, indicating a high probability of interest rate cuts in the near future, signaling an undeniable policy shift. Moreover, the global M2 money supply, a key macroeconomic indicator, continues its upward trajectory, historically preceding Bitcoin price increases by approximately 10 to 12 weeks. These combined signals suggest that a liquidity surge is on the horizon, creating a fertile ground for a new altcoin season following the Fed's pivot.