Bitcoin has not grown at the rapid rate expected so far in the cycle, and some have blamed this on the fact that the Federal Reserve has been practicing quantitative tightening. This refers to a period when the central bank is reducing its money supply in a bid to reel in excess liquidity. As a result, buying power seems to have fallen as there isn’t enough liquidity flowing into risk assets such as Bitcoin. However, this could all be changing very soon as the Fed begins to change its stance. Quantitative Easing Could Bring About More Liquidity After a long stretch of quantitative tightening, the Fed’s recent comments suggest that there is a move toward quantitative easing. This is expected to happen sometime in December, and it could trigger a massive shift as the market looks to close another year. Quantitative easing, as the name suggests, is the opposite of quantitative tightening, and the former sees the Fed pump liquidity into the market. This rush in liquidity could lead to investors taking more risks, and this, in turn, would be good for assets like Bitcoin as investors move into the crypto market for the long term. Related Reading: Bitcoin Price Breaks Below 50-MA For The First Time This Cycle, Why A Crash To $38,000 Could Be Coming The announcement for a move to quantitative easing is expected to come on December 1, and naturally, there have been debates on its impact on the Bitcoin price. Crypto analyst and investor Ted Pillows shared a chart showing that the last time the Fed ended quantitative tightening in 2019, the Bitcoin price had suffered a notable crash. The post suggests that this could be the case as the Fed makes its move in less than two weeks. However, this point has been countered by another crypto analyst, who pointed out the differences between what happened in 2019 and what is going on in 2025. Why This Time Could Be Different For Bitcoin In a response to Pillows, pseudonymous crypto analyst Sykodelic outlined that one of the very first reasons the Bitcoin price won’t crash with the announcement of quantitative easing is the fact that the Fed overdid it in 2019. According to the post, the Fed overdid quantitative tightening, which led to the 2019 repo crisis. Related Reading: Ethereum Price To Recover Or Crash? The Real ‘Leverage Point’ Investors Should Know About However, this time around, while the reserves are low, they haven’t reached danger territory. Also, with a $2 trillion fiscal deficit, the analyst explains that the US will have no choice but to stimulate the economy with liquidity, or else it risks going bankrupt. Since the Bitcoin price already had a major drop, reaching record-breaking MACD levels, the analyst believes the chances of a drop are low. “If you are betting on a year long bear market you are basically betting that the USA will let itself go broke,” the analyst said. “There is simply no room left for the FED to turn.” Featured image from Dall.E, chart from TradingView.com
Quantitative easing (QE), explained Quantitative easing (QE) is a non-traditional monetary policy tool used by central banks, particularly when interest rates are already low and cannot be reduced further. It was popularized during the 2008 global financial crisis when traditional monetary tools, like lowering interest rates, were insufficient to stimulate economic growth. The main goal of QE is to boost the economy by increasing the money supply. This is achieved by encouraging banks to lend more and making borrowing cheaper for consumers and businesses. When central banks implement QE, they purchase government bonds or other securities from the market, injecting cash into the financial system. Even though people sometimes say QE is like “printing money,” it’s not the same as making new physical cash. Instead, it increases the amount of digital money — meaning the balances held in bank accounts — in the economy. This isn’t cryptocurrency; it’s regular money created by the central bank and used by banks to lend more, which helps boost spending and investment.QE can also raise the prices of assets like stocks and bonds because the extra money looking for returns drives demand higher. Governments also used QE during the COVID-19 pandemic to help keep the economy stable and support growth. How does quantitative easing work? To understand how QE functions behind the scenes, it’s important to look at the step-by-step mechanics that drive this policy. QE doesn’t work through a single action — it operates through a chain of events that begins with the central bank and eventually influences everyday economic activity. Here’s how the process typically unfolds:Asset purchases: Central banks buy government securities, such as treasury bonds, from banks and financial institutions.Increasing money supply: These purchases flood the financial system with liquidity.Lowering interest rates: With more cash on hand, banks lower interest rates, making loans cheaper.Boosting lending and spending: Cheaper loans mean more business investments and consumer spending, which are key drivers of economic growth. Quantitative easing in practice: Historical examples Quantitative easing isn’t just a theory — it’s been used by major central banks during times of economic trouble. Here are some real-world examples of how it worked:United States (2008–2014; 2020): The global financial crisisAfter the 2008 housing market crash, the US economy was in a deep recession. To help:The Federal Reserve launched three rounds of QE (QE1, QE2, QE3).It bought trillions of dollars in government bonds and mortgage-backed securities.This helped lower interest rates, supported lending, and boosted the stock market.When COVID-19 shut down economies worldwide, the US Fed acted quickly:It reintroduced QE, buying $120 billion per month in bonds at its peak.It aimed to keep borrowing costs low and support businesses and households.Japan (2001–2006, and again from 2013 onward): Fighting deflationJapan was dealing with low inflation and sluggish growth for years. The Bank of Japan (BoJ):Started using QE before most other countries.Bought large amounts of government bonds and later included stocks and real estate investment trusts.Eurozone (2015–2022): Post-debt crisis recoveryThe European Central Bank (ECB) introduced QE after a debt crisis hit Greece, Italy and Spain:The ECB bought government bonds from eurozone countries to bring down borrowing costs.This supported weaker economies and aimed to prevent deflation (falling prices). How quantitative easing impacts crypto markets Quantitative easing doesn’t just affect traditional financial markets — it also impacts the cryptocurrency market. When central banks inject more cash into the economy, some of that money flows into alternative assets like Bitcoin (BTC) and altcoins, driving up their prices. This surge in liquidity often boosts asset prices across the board, including cryptocurrencies, as more money becomes available for investments.Additionally, during QE, fiat currencies may lose value due to increased money supply, leading some investors to seek out cryptocurrencies as a hedge against inflation or currency devaluation. Bitcoin, in particular, is often seen as a store of value similar to gold. For example, in 2020, during the COVID-19 pandemic, the US Federal Reserve launched aggressive QE. At the same time:Bitcoin was trading under $5,000 in March 2020.By late 2021, it had soared past $60,000.Key factors behind Bitcoin’s growth during QE include rising inflation fears and low interest rates pushing investors toward alternative assets. Among these, a major driver could be the search for a store of value outside traditional finance. Thus, QE can indirectly contribute to crypto market booms by influencing investor sentiment and liquidity.The flip side: When QE ends, crypto may sufferWhen central banks end QE or start raising interest rates (tightening policy), liquidity is reduced, and borrowing becomes more expensive. This can lead to pullbacks in risk assets, including crypto.For example, in 2022, the Fed began quantitative tightening to combat inflation. Bitcoin dropped from around $47,000 in March to below $17,000 by December — a decline likely driven by investors shifting to safer assets and reduced risk appetite due to rising interest rates. Quantitative easing (QE) vs. quantitative tightening (QT): Key differences Quantitative easing (QE) and quantitative tightening (QT) are two opposing monetary policies used by central banks. QE involves expanding the money supply by purchasing assets such as government bonds, which injects cash into the economy to stimulate growth. Its main purpose is to lower interest rates and encourage lending when the economy is struggling.QT is the process of contracting the central bank’s balance sheet. It involves selling assets or letting them mature, reducing the money supply. The goal of QT is to cool down an overheating economy and prevent inflation from rising too quickly.The key difference between QE and QT lies in their impact on the central bank’s balance sheet: QE expands it, whereas QT contracts it. In terms of market effects, QE tends to drive asset prices up, whereas QT can lead to lower asset prices and higher interest rates. Both policies significantly influence inflation and market stability.Are the Fed tapering and quantitative easing the same?No, tapering and QE are not the same — but they are connected.Quantitative easing is when the Federal Reserve actively buys assets, such as government bonds, to inject money into the economy and lower interest rates.Tapering is when the Fed slows down those asset purchases — it’s the beginning of the end of QE, not a reversal. Is the Fed still tightening or easing in 2025? As of April 2025, the US Federal Reserve is navigating a complex economic landscape characterized by persistent inflationary pressures and slowing economic growth. In response, the Fed has maintained its benchmark interest rate within the 4.25%–4.50% range, signaling a cautious approach to monetary policy adjustments.While the Fed has not fully transitioned to an easing stance, it has begun to moderate its QT efforts. Specifically, starting in April, the Fed reduced its monthly runoff of Treasury securities from $25 billion to $5 billion while continuing to allow $35 billion in mortgage-backed securities to mature without reinvestment.Looking ahead, the Federal Open Market Committee (FOMC) projects the possibility of two interest rate cuts later in 2025, contingent upon economic conditions. This projection reflects the Fed’s attempt to balance the dual mandates of controlling inflation and supporting employment amid uncertainties, including the impact of recent tariff policies. Pros and cons of quantitative easing Quantitative easing boosts growth and lowers borrowing costs, but overuse can fuel inflation, asset bubbles and long-term policy challenges.ProsQE helps boost economic activity by increasing the money supply and encouraging lending and investment.By purchasing government bonds, QE drives down interest rates, making borrowing cheaper for businesses and consumers.By injecting liquidity into the economy, QE helps boost demand and supports price stability, preventing deflation.ConsAn excessive increase in the money supply can devalue the currency and push inflation higher.Easy money can drive up asset prices, leading to overvalued stocks, bonds or real estate.QE adds to national debt, making it harder for central banks to manage inflation or interest rates in the future.In the end, quantitative easing remains a powerful but double-edged tool: capable of stabilizing economies in crisis yet carrying long-term risks that must be carefully managed to avoid repeating past imbalances.
Bitcoin has entered a period of relative calm, with its price oscillating between $81,000 and $89,000 over the past several sessions. This newfound stability has reassured many traders, as the odds of a sharp decline below $80,000 have diminished significantly. Selling pressure is starting to ease, buyers are gradually stepping in, and the market appears to be in an accumulation phase, which is often a precursor to another rally. Even with selling pressure easing, there’s still a risk of breakdown below $80,000 at any moment. However, dormer BitMEX CEO and renowned crypto investor Arthur Hayes recently shared a bold projection that Bitcoin will reach $110,000 before retesting the $76,500 price level. Arthur Hayes Predicts $110,000 Will Come Before Any Pullback to $76,500 As it stands, Bitcoin is closer to $75,000 than it is to $110,000, but popular crypto commentator Arthur Hayes believes the leading cryptocurrency will reach the latter before the former. A climb to $110,000 will translate to a new all-time high for Bitcoin, as its current peak is $108,786, set in January. Related Reading: Crypto Pundit Arthur Hayes Says Be Patient After Bitcoin’s 36% Crash, Reveals Possible Bottom At present, Bitcoin is trading about 20.3% below that high, and concerns about a deeper correction are valid. The possibility of a pullback to $76,500 is still a genuine concern, especially since that price sits just under this month’s local low, and it can be quickly retested before another bounce upwards. Hayes’ comments on social media platform X offered both a price target and a macroeconomic rationale. Hayes stated, “I bet $BTC hits $110k before it retests $76.5k,” clarifying that the momentum of the market and shifts in monetary policies are more likely to push the Bitcoin price up rather than another correction towards $76,500. He went further to suggest that once Bitcoin crosses $110,000, it may not look back until it starts approaching $250,000. This price target resonates with outlooks from other crypto analysts. Incoming Shifts In Monetary Policies Central to Hayes’ reasoning is the Federal Reserve’s changing stance on liquidity. He pointed out that the Fed is transitioning from quantitative tightening (QT) to a new phase of quantitative easing (QE), particularly in the Treasury markets. Although the Fed has been engaged in quantitative tightening (QT) since June 2022, there are now discussions about pausing or slowing down the balance sheet runoff. According to Reuters, some analysts predict a shift towards a more QE-like approach. Related Reading: Bitcoin Price Forecast: LTF Head And Shoulders Pattern Predicts Crash – Here’s The Target This shift could potentially inject more liquidity into the financial system, pushing assets like Bitcoin to higher price levels. Hayes also dismissed concerns about inflation, stating that the Fed Chairman appears to view it as “transitory inflation.” At the time of writing, Bitcoin is trading at $86,600, having traded at an intraday high of $88,713 in the past 24 hours. Featured image from Unsplash, chart from Tradingview.com
According to crypto entrepreneur Arthur Hayes, Bitcoin (BTC) is likely to bottom around $70,000, marking a 36% correction from its latest all-time high (ATH) of $108,786. Hayes stated that such corrections are “very normal” in a bull market. Bitcoin To Dip Further? Yesterday, Bitcoin hit a four-month low of $76,606 as both the global cryptocurrency and stock markets tumbled amid rising fears of an economic recession. For context, the S&P 500 (SPX) has dropped nearly 8% over the past month. Related Reading: Bitcoin Slips Under 200-Day Moving Average – Will The Downtrend Continue? Latest data from predictions market platform Polymarket assigns a 39% chance of a US recession in 2025. On February 28, the platform gave a 23% probability of a US recession this year. Despite these economic concerns, Hayes advises crypto investors to remain patient. In an X post published yesterday, the former BitMEX CEO stated that BTC will likely find a bottom around $70,000, completing a routine 36% correction from its ATH in January. Hayes further noted that once BTC hits $70,000, traditional financial markets – including the S&P 500 (SPX) and Nasdaq (NDX) – would need to experience a sharp decline, accompanied by failures in major financial institutions. This, in turn, would prompt central banks like the US Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BOJ) to initiate quantitative easing (QE), creating an optimal buying opportunity. He added: Then you load up the truck. Traders will try to buy the dip, if you are more risk averse wait for the central banks to ease then deploy more capital. You might not catch the bottom but you also won’t have to mentally suffer through a long period of sideways and potential unrealised losses. Historical data suggests that QE has been highly beneficial for BTC’s price. During the last QE period, from March 2020 to November 2021 – amid the COVID pandemic – BTC surged from $6,000 to as high as $69,000, marking an astonishing 1,050% gain. Similarly, crypto analyst Michael van de Poppe shared the following chart, noting that BTC likely completed a double-bottom re-test and experienced a strong bounce after yesterday’s potential low. He further suggested that if BTC breaks past $83,500, it could see an even stronger move to the upside. Data Points Toward BTC Trend Reversal While Hayes predicts that BTC has yet to bottom, several indicators suggest the flagship cryptocurrency may soon witness a trend reversal. For instance, BTC’s Relative Strength Index (RSI) is currently at its lowest level since August 2024, signaling that a potential recovery may be imminent. Related Reading: Bitcoin Fills CME Gap Between $78,000 and $80,000 – Is A Reversal Around The Corner? Additionally, the US dollar index (DXY) recently experienced one of its largest weekly declines since 2013, raising hopes for a rally in risk-on assets like Bitcoin. At press time, BTC is trading at $80,008, up 0.1% in the past 24 hours. Featured image from Unsplash, charts from X and TradingView.com
After a flash crash to $89,256 earlier this month, Bitcoin (BTC) made a swift recovery, reaching a new all-time high (ATH) of $108,786 on January 20. However, according to a crypto analyst, further upside could be limited until the Federal Open Market Committee (FOMC) meeting later this month. Bitcoin To Remain Range-Bound Until FOMC Meeting The world’s largest cryptocurrency has been on a bullish trajectory since November, fueled by Donald Trump’s victory in the US presidential election. Over the past three months, BTC has surged from approximately $67,000 to $104,536 at the time of writing, posting gains of over 50%. Related Reading: Bitcoin Price Forecast Of $150,000 ‘Too Low’ Amid Rising Adoption, Crypto Trader Says However, crypto analyst Krillin predicts that BTC may continue to “chop” in the $100,000 to $110,000 range until the FOMC meeting. The analyst suggests that unless the Bank of Japan takes extraordinary policy measures, BTC is unlikely to break out of this range before the end of the month. At present, the CME FedWatch tool indicates a 99.5% probability that the US Federal Reserve (Fed) will not cut interest rates at the upcoming meeting. Krillin expects a market dump to follow the anticipated hawkish meeting, which may be partially offset by a dovish-sounding press conference hinting at future quantitative easing (QE). For the uninitiated, QE is a monetary policy where central banks inject money into the economy by purchasing government bonds and other financial assets to lower interest rates and stimulate economic activity. This increased money supply can weaken fiat currencies, potentially driving investors toward assets like BTC, boosting its price as a hedge against inflation and currency devaluation. Krillin’s prediction aligns with a recent market observation which states that BTC profit-taking has declined by 93% from its December peak, and that the long-term holders are back in accumulation mode, preparing for the next leg up. However, how long the current consolidation phase may last is anyone’s guess. Meanwhile, crypto analyst Ali Martinez notes a sharp decline in capital inflows into the digital assets market, from $134 billion on December 10 to $43.37 billion. This low liquidity could result in sharp price swings, increasing the risk of liquidations for leverage traders. Will BTC Peak In Q2 2025? As BTC awaits the FOMC meeting to determine its next price trend, some analysts remain optimistic that the cryptocurrency could hit its market cycle peak in Q2 2025 as more institutions embrace the asset under favourable regulations. Related Reading: Bitcoin May Target $145,000 To $249,000 Under Trump Administration: Report For example, crypto analyst Dave The Wave recently predicted that BTC will likely peak in the summer of 2025. A report by Bitfinex supports this outlook, forecasting that Bitcoin could surge to $200,000 by mid-2025, albeit with minor corrections along the way. That said, Bitcoin must defend the $100,000 price level, as failure to do so could see the asset drop to as low as $97,500. At press time, BTC trades at $104,536, up 1.4% in the past 24 hours. Featured image from Unsplash, Charts from X and TradingView.com