🏦 Current Fed Policy: Quantitative Tightening (QT)

Since June 2022, the Fed has been shrinking its balance sheet by letting about up to $50B/month of Treasuries and mortgage-backed securities mature without reinvestment .

The pace of QT has slowed recently; the Fed is approaching its target levels for bank reserves and reverse repo balances, suggesting they’ll stop QT in the first half of 2025 .

📉 Will QE Return?

Not immediately—the Fed is not planning new asset purchases right now.

But a joint Fed paper (NY & SF Fed) warns that a return to near-zero rates—and likely new QE—remains a significant risk in the medium to long term due to ongoing economic uncertainty .

Deutsche Bank has suggested emergency QE might be triggered if **Treasury yields spike above 5%** .

📅 Timeline to Watch

QT likely ends by mid–2025, once reserves hit the "ample" level.

After QT ends, the Fed’s next moves depend on economic conditions:

If recession risk rises, inflation falls too much, or markets seize up, the Fed could shift to QE.

Still, no scheduled QE restart is on the current Fed roadmap.

📊 Impact on Crypto Markets

End of QT alone may lead to stabilizing or modest easing in rates—crypto may see a boost from improved liquidity.

If QE resumes, expect:

A surge in risk assets like Bitcoin and altcoins

Weaker USD driving crypto gains

Enhanced inflation hedge narrative

✅ Summary Table

Phase Expected Timing Likelihood of QE Crypto Impact

QT ongoing Now – mid‑2025 Unlikely Neutral to mildly positive

QT ends 1H 2025 Still unlikely Slight boost in risk assets

QE resumes Dependent on crisis/economic weak/growth support Medium–term risk Strong bullish tailwinds

Bottom line: The Fed is set to end QT by mid‑2025, but won’t resume QE unless triggered by economic stress. If QE does return, it could be a major catalyst for crypto upside.