Fed halts QT (quantitative tightening)—and Bitcoin traders are watching closely

The Federal Reserve officially ended its quantitative tightening, or QT, program on Dec. 1, freezing its balance sheet at $6.57 trillion. The move signals a shift in U.S. monetary policy with significant implications for Bitcoin and broader crypto markets.

Summary

• The Fed ended its three-year Quantitative Tightening program, freezing its balance sheet at $6.57T.
• Bitcoin slid back into the $90,000 region on Dec. 2.
• Analysts say the shift could become a tailwind for crypto, echoing patterns seen after the 2019 QT halt.

The move caps a three-year run in which the Fed drained $2.39 trillion from the financial system—its largest liquidity withdrawal in history. Treasury runoff has now been halted, though the Fed will continue reducing mortgage-backed securities by $35 billion each month. The decision comes as bank reserves sit near $2.89 trillion, a level officials worried could risk market instability if QT continued.

Bitcoin (BTC) traded around $92,000 at last check on Dec. 2, down over 16% over the course of a month. Roughly $1 billion in leveraged crypto trades were liquidated during Monday’s selloff, underscoring how thin liquidity can magnify volatility in risk assets.

Investors look for historical clues

When the Fed paused QT in 2019, markets rallied 17% within weeks, though Bitcoin initially fell about 35% before delivering major gains in early 2020.

This cycle, however, looks different. Interest rates have already been cut to 3.75%–4.00%, the once-massive Overnight Reverse Repo facility has all but drained, and institutional participation has surged. Spot Bitcoin ETFs now hold more than $50 billion, drawing steady inflows from firms such as BlackRock and Fidelity.

If history rhymes, the Fed’s policy shift could set the stage for a rebound. As Fundstrat’s Tom Lee told CNBC, the QT halt is “a tailwind” for both Bitcoin and equities heading into 2026.