QT termination signal release Bitcoin surges 7% Can the liquidity rebound continue?

Source: BlockMedia Original Title: [뉴욕 코인시황/마감] In a single phrase, 'QT is over,' Bitcoin surged 7%… A signal for a liquidity rally? Original Link: The Federal Reserve (Fed) has effectively halted quantitative tightening (QT) and initiated large-scale liquidity supply, leading to a rapid rebound in Bitcoin within a day. Bitcoin, which plummeted to the initial stage of $80,000 last weekend, quickly shifted to a recovery trend after the signal of a shift in Fed policy spread on the 2nd (local time). Meanwhile, reports of traditional financial institutions, such as a global asset management company, participating in the digital asset market have also revitalized investor sentiment, leading to an overall market rebound.

Bitcoin surges 7%… Ethereum and altcoins rise in sync

According to CoinMarketCap data, Bitcoin rose by 6% compared to the previous day, priced at $90,936. Ethereum (ETH) increased by 8.92%, priced at $3,007, reclaiming the $3,000 mark. Solana (SOL) surged 12.33% to $140.02, and Ripple (XRP) rose 8.18% to $2.17. Major altcoins such as Dogecoin (DOGE·+8.86%) and Cardano (ADA·+15.13%) also saw significant increases.

The Fed Ends QT and Supplies $13.5 Billion in Liquidity…“Substantive Policy Shift”

The core background of this rebound is the halt of the Federal Reserve's quantitative tightening (QT) and the expansion of short-term liquidity supply. The Fed supplied $13.5 billion (approximately 18 trillion won) to the short-term financial market through the repurchase agreement (Repo) market the day before yesterday. This is the second largest supply since the pandemic.

A well-known investment strategist and company chairman stated: “The end of QT by the Fed can be seen as a signal,” and “this means a fundamental turning point in the flow of liquidity.” He also added, “In the past, right after the end of QT, there has been a precedent for a strong rebound in financial markets and Bitcoin,” believing that this flow may not be limited to a short-term surge.

QT is a policy by the Federal Reserve to absorb liquidity by shrinking its asset holdings, which has had a negative impact on the asset markets. This move is interpreted as a shift from a long-term tightening stance, and the market has embraced it as “the starting point of a liquidity rebound.”

Institutional demand inflow expectations also play a role… Traditional financial institutions open the doors to cryptocurrency.

In addition to changes in liquidity policies, the traditional financial institutions' approach to expanding into the cryptocurrency market is also listed as a factor stimulating investment sentiment. Global asset management firms allow their clients to access cryptocurrency ETFs, while a certain compliant platform has approved that Bitcoin spot ETFs can account for 1-4% of the investment portfolio in its asset management department.

The market interprets these actions as a signal flare for institutional capital inflows. In fact, over the past year, major asset management firms and banks' cryptocurrency ETFs have shown a close correlation with the rise in Bitcoin prices.

The derivatives market also “anticipates an increase”… defensive positions are forming below.

As a result, strategies reflecting rising expectations in the derivatives market have become active. A derivatives strategist stated: “The options market has seen active selling of put options in the $80,000-$85,000 range, while call options above have been selectively bought.” He further explained that “this is viewed as considering that range as a support line, with positions expecting a gradual rebound before the end of the year.” This is understood as a structural recovery expectation being superior to a technical rebound.

The variable interest rate issued by Japan is a risk factor… Caution still exists.

However, some experts have expressed caution about the aggressive rebound in the market. A representative from a risk analysis firm warned: “The rise in Japan's 10-year government bond yields may exert liquidity tightening pressure on the global asset market,” and “especially, the cryptocurrency market is highly sensitive to Asian capital, which may be directly affected by the volatility of the foreign exchange market.”

He added that “a certain leading exchange offers leverage of up to 50 times, so the possibility of volatility significantly expanding cannot be ruled out when combined with liquidity concerns.”