Analysis: The Federal Reserve may end quantitative tightening, the Bitcoin market hopes for a policy shift

PANews reported on March 19 that, according to market analysis, the Federal Reserve may hint at ending its Quantitative Tightening (QT) program in the upcoming interest rate decision, which could provide support for Bitcoin and other risky assets. The market generally expects the Fed to maintain interest rates within a range of 4.25%-4.50%, with a focus on the future direction of the QT program. Since launching QT in June 2022, the Fed has gradually reduced its balance sheet size, and ending QT could signal a new monetary policy era by injecting liquidity into markets. Previously, Federal Reserve Chairman Jerome Powell hinted that QT might end in 2025.

Analysts pointed out that ending QT could alleviate liquidity pressure in U.S Treasury bond markets while also potentially benefiting risky assets like Bitcoin. However, stagflation risks predicted in economic forecasts may limit asset price increases. Bank of America predicts that due to debt ceiling issues, the Fed might pause QT and delay further plans for interest rate cuts against a backdrop of downwardly revised economic growth expectations and upward inflation adjustments. Additionally, data from prediction platform Polymarket shows there is a 100% probability that QT will end before May.