Bitcoin has been struggling to build momentum in recent weeks, and the return of cash into the system is raising questions about whether this could be the moment that changes the tone of the crypto market. That growing sense of anticipation has already started to show up in prices, with the total crypto market cap climbing more than $250 billion from its $3.016 trillion low on December 2.

What Happened: The Liquidity Injection And Why It Matters

After officially bringing its multi-year quantitative tightening (QT) program to an end, the central bank followed up with a $13.5 billion overnight repo operation, funneled through the New York Fed. Banks brought $13.5 billion in Treasuries to the Fed, the Fed accepted all of it, and instantly injected $13.5 billion of fresh reserves into the system.

The move, which is the second-largest liquidity injection since the COVID-19 crisis, effectively puts an end the steady shrinkage of bank reserves that has persisted for years, easing pressure on short-term funding markets and signaling a more accommodative liquidity environment.

The crypto market responded almost instantly. A handful of major assets began turning green within hours of the injection, with Bitcoin leading the charge with an instant break above $92,000.

The influx was visible at a macro level as well: the total crypto market cap climbed from a December 2 low of $3.016 trillion to $3.269 trillion by December 4. A gain of more than $250 billion in under 48 hours

What Investors Should Watch Next

Ending QT leads to better liquidity and often create a bullish environment for equities and other riskier investments like cryptocurrencies. However, although a single liquidity event does not guarantee a sustained multi-month rally, this injection stands out not just for its size but for what it represents. 

Related Reading: 4 Bitcoin Indicators That Led To Market Rallies In The Last 2 Years Have Returned

In a CNBC interview, Fundstrat’s Tom Lee stated that the Fed’s decision to stop QT will be a turning point for the cryptocurrency market. Lee pointed out that the last time the Fed ended QT, the market rose about 17% within three weeks.

The previous time the Fed brought quantitative tightening to a stop was in July 2019, roughly a year after it began reducing its balance sheet. In the three weeks that followed, the S&P 500 climbed about 5%. Bitcoin’s also initially rallied in the same period, but its strongest reaction came months after, towards late 2019 and early 2020.

The Federal Reserve has officially brought its multi-year quantitative tightening program to a close, freezing its balance sheet at about $6.57 trillion after draining more than $2.3 trillion from the system since 2022. 

The Federal Reserve’s decision to formally end quantitative tightening has created a sense of anticipation across the crypto market. Liquidity inflows have shaped every major crypto cycle, and removing the multi-year drain on liquidity is expected to set the stage for healthier crypto market conditions and see the Bitcoin price push above $100,000 in the coming days.

Policy Shift Meets A Market Still Searching For Direction

The Fed has frozen its balance sheet at roughly $6.57 trillion after three years of balance-sheet reduction. Treasury runoff has stopped on December 1, though mortgage-backed securities will continue declining slowly. 

Ending QT means that the Fed is stepping away from the rapid balance-sheet reduction that tightened financial conditions throughout 2023 and 2024. The move comes after bank reserves fell to levels that threatened short-term funding stability, and the Fed made the move to halt any further liquidity drain.

Crypto investors are expecting the end of QT to relieve some of the selling pressure that has contributed to the crypto industry in recent months. This is due to historical comparisons of how the industry played out in previous ends to QT. 

In 2019, when the Fed last ended QT, digital assets bottomed within weeks and then entered a strong recovery phase. That period represented a decisive low for altcoins and preceded Bitcoin’s rise from roughly $3,800 to $29,000 over the next year and a half.

Interestingly, the entire crypto market’s short-term behavior is starting to show signs of bullishness. Particularly, the entire market is up by 7.2% in the past 24 hours, with Bitcoin leading the charge. However, cryptocurrencies are facing a different macro environment today, and the outlook is whether Bitcoin and other cryptocurrencies can go on another extended bullish rally in the coming months.

Why Is Bitcoin’s Reaction Delayed?

Ending QT is a meaningful turning point, but it does not automatically flood the system with fresh liquidity. Benjamin Cowen, founder of IntoTheCryptoverse, offers one of the clearest explanations for what to expect. 

He noted that in 2019, the Fed announced QT would end on August 1, but the balance sheet continued falling through mid-August because previously scheduled Treasury maturities had not yet settled. It wasn’t until early 2020 that Bitcoin started to experience explosive gains. According to Cowen, the same dynamic applies now. 

Therefore, the Federal Reserve’s balance sheet could continue edging lower for a few more weeks, meaning the first meaningful uptick in liquidity may not show up until early 2026. This delay suggests that traders hoping for an immediate boost or a quick return of Bitcoin above $100,000 are simply ahead of the cycle. The tightening phase has ended, but the actual recovery in liquidity has yet to begin.

Crypto analyst Tony Severino has revealed a historical bearish pattern that could send the Bitcoin price to as low as $42,000. This bearish outlook for BTC comes amid a rebound for the flagship crypto, with a recent surge above the psychological $90,000 level. 

Bitcoin Price Risks 50% Drop To $42,000 Based On This Pattern

In an X post, Severino stated that the Bitcoin price likes to retrace to subwave 3/4 of wave 3/4 of its impulse. Based on this, the analyst indicated that BTC could crash to as low as $42,000 on wave C of this move to the downside. His accompanying chart showed that this decline could happen sometime at the start of next year. 

This bearish Bitcoin price prediction comes amid BTC’s rebound above $90,000 following the end of quantitative tightening (QT) by the U.S. Federal Reserve. The flagship crypto has also rebounded amid optimism of another rate cut at this month’s FOMC meeting. CME FedWatch data shows there is almost a 90% chance that the Fed will lower rates again this month. 

However, despite these macro positives for the Bitcoin price, analysts such as Tony Severino have suggested that BTC is in a bear market and is likely to trend lower in the coming months. In an X post, he highlighted the BTC monthly chart, suggesting it showed a subtle volume breakout that confirmed a “not-so-subtle” trendline breakdown.  

Meanwhile, market technician JT described statements that the QT ending is bullish for the Bitcoin price as being a “fallacy.” He alluded to the possibility that the Bank of Japan (BOJ) may hike rates this month as one of the stressors to liquidity beyond QT.  

Peter Brandt Predicts Drop To Mid $40ks

In an X post, veteran trader and analyst Peter Brandt predicted that the Bitcoin price could drop to mid $40,000. He stated that the upper boundary of the lower green zone starts below $70,000 and that the lower support boundary is in the mid $40,000. Notably, Brandt had previously predicted that BTC could drop to around $50,000 before it then rallies to around $200,000 in the next bull market. 

The veteran analyst noted that there have been five major bull market cycles for the Bitcoin price since its inception. He further stated that in all previous cycles, the violation of the dominant parabolic advance has been followed by a 75% plus correction with no exception. As such, he expects BTC to undergo another significant correction in this cycle, potentially dropping below $50,000. 

At the time of writing, the Bitcoin price is trading at around $93,000, up almost 7% in the last 24 hours, according to data from CoinMarketCap.

This week Jonathan chats with Maurice Kalinowski about QT! That’s the framework that runs just about anywhere, making it easy to write cross-platform applications. What’s the connection with KDE? And how has this turned into a successful company? Watch to find out!

• https://www.qt.io/

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