Bitcoin Sentiment Stays Negative Despite Powell Suggesting QT May Be Wrapping Up

Powell Signals QT Near End, But BTC Remains Muted

Federal Reserve Chair Jerome Powell on Tuesday suggested that the Fed may soon reach the point to end its quantitative tightening (QT) program, yet Bitcoin (BTC) and the broader crypto market remain largely flat, with derivatives indicating persistent bearish sentiment.

Powell stated, “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions. We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.”

Since 2022, QT has reduced the Fed’s balance sheet from $9 trillion to $6.6 trillion, unwinding the emergency liquidity injected during the COVID-19 crisis. Powell stressed that maintaining sufficient bank reserves is essential to prevent funding disruptions and safeguard financial stability.

Market Reaction
Despite expectations of two 25-basis-point rate cuts by year-end, BTC traded near $112,600, largely unchanged over 24 hours. Deribit options show puts continuing to trade at a premium, signaling continued bearish positioning.

QT’s pace has slowed significantly since mid-2024, with Treasury redemptions capped at $5 billion and mortgage-backed securities at $35 billion per month. Analysts caution that the end of QT does not guarantee a sudden bullish impulse, unlike previous balance sheet expansions.

Broader markets responded with the 10-year Treasury yield dropping to 4%, the dollar index easing to 98.75, and gold climbing above $4,200/oz, while Nasdaq futures rose 0.7%, reflecting easing monetary pressures.

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