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Crypto Market Focused on Fed’s Potential Treasury Bill Purchases
The upcoming Federal Reserve meeting is drawing attention from crypto markets, focusing on potential quantitative easing (QE) rather than just interest rate cuts. Traders anticipate a 0.25% rate cut but are more concerned about the Fed's signals regarding reserve management and balance sheet changes.
- Expectations of a $45 billion monthly Treasury bill purchase program could indicate a shift towards increasing liquidity, termed as "stealth QE" by some in the crypto space.
- James E. Thorne highlights that the focus should be on whether Powell will announce operations to manage reserves due to liquidity concerns.
- This shift would address reserve adequacy issues without labeling it as QE, impacting net liquidity direction which is crucial for crypto traders.
- Macro analysts suggest QE might return in 2026 but at a reduced scale compared to past crisis measures, with less effect on risk asset markets.
- The distinction between buying treasury bills versus coupons is significant, indicating a more modest impact on long-term yields and risk assets.
The immediate effect on Bitcoin and the broader crypto market hinges on Powell's statements regarding reserves and future liquidity operations. The current total crypto market cap stands at $3.1 trillion.
