Fed ends QT tomorrow — Crypto thinks meltup starts now

On December 1, 2025, the Federal Reserve will officially end quantitative tightening (QT), freezing its balance sheet at $6.57 trillion after draining $2.39 trillion from the system.

Analysts are pointing to similarities with the previous QT suspension in 2019, when a deep altcoin bottom coincided with a sharp rise in Bitcoin. With liquidity returning and interest rates already lowered to 3.75-4.00%, the crypto market is bracing for a potential bullish shift.

Fed ends QT tomorrow — Crypto Eyes 2019-style liquidity boost

The Fed’s suspension of balance sheet outflows comes amid tight bank reserves, which currently amount to about $3 trillion, or about 10% of U.S. GDP. The overnight reverse repurchase facility, which previously absorbed $2.5 trillion in excess cash, has been reduced to nearly zero, eliminating a critical liquidity buffer.

In October 2025, the secured overnight lending rate rose to 4.25%, exceeding the Fed’s target range. Standing repo facilities recorded $18.5 billion in activations in one day, reflecting strong demand for liquidity.

The October 29 FOMC minutes detailed operational adjustments aimed at improving policy communication.

An excerpt from the Fed’s Oct. 29 statement reads: “The committee has decided to complete the reduction of its total securities holdings on Dec. 1.”

This means QT will officially end on December 1st and the Fed will stop allowing securities to mature without reinvestment. After that date, the balance sheet will no longer shrink.

The committee said downside risks to employment have increased, even though unemployment remains low and inflation is “slightly rising.”

Analysts say this signals a long-term change. Originally an emergency tool, the Standing Repo Facility now functions as a permanent daily liquidity provider, effectively incorporating the Fed into Treasury market operations.

Researcher Shanaka Anslem describes this as the “standing repo era,” a structural change that will have a lasting impact on global finance.

Historical similarities and impact on the cryptocurrency market

Crypto analysts are drawing direct comparisons to August 2019, when the Fed ended QT and altcoins bottomed.

While past performance is no guarantee, key indicators support cautious optimism.

• Bitcoin’s advantage is less than 60%, but
• Global M2 money supply is increasing and has historically led BTC by 10-12 weeks.

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Bitcoin dominance and M2 money supply. Source: TradingView

The end of QT could inject up to $95 billion in monthly liquidity and support large cryptocurrencies such as Bitcoin, Ethereum, Solana, and BNB.

Gold’s recent highs show further correlation, as BTC often lags gold price movements by about 12 weeks.

Meanwhile, the Federal Reserve’s December 10 FOMC meeting was held under unusual circumstances.

• The 43-day government shutdown wiped out two months of CPI data, leaving policymakers without up-to-date inflation statistics.
• CPI is currently 3%, above the Fed’s 2% target.
• Treasury Secretary Scott Bessent confirmed that the Fed is considering further rate cuts following October’s 25 basis points cut.

The U.S. federal debt exceeds $36 trillion, with annual interest costs exceeding $1 trillion. The standing repo facility enables rapid monetization of Treasury collateral and represents a structural change with long-term market implications.

Some cryptocurrency analysts expect an immediate rally after QT ends, while others expect the alt season to shrink within a few months and a larger market cycle in 2027-2028.

The consensus is that liquidity, rather than hype or Bitcoin halving, has historically driven crypto cycles.

December 1st marks a key inflection point where the Fed’s liquidity pivot could remove one major hurdle for risk assets. This move could set the stage for the crypto market to react, whether through a mini-rally or through the early stages of a broader supercycle.

QT ends on Dec. 1, but the Fed emphasized that future adjustments to the federal funds rate will depend on future data and changes in economic risks.

This shows the Fed is willing to keep monetary policy flexible and adjust interest rates and other measures as needed.

Investors should pay close attention to developments in interest rate guidance, Treasury liquidity operations, and M2 money supply in the coming weeks.

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