Can the end of QT in the US trigger a crypto bull market? The true salvation the market is hoping for might be someone else.

The Federal Reserve officially announced the end of quantitative tightening (QT) policy by the end of 2024, triggering a chain reaction in the crypto market. BTC immediately rebounded to around $90,000, ETH retook the $3,000 level, and competing coins like SUI and SOL also experienced rapid gains. The market shifted from silence to frenzy in an instant, with investors eagerly awaiting a new wave of liquidity. However, there are also voices warning: Is this rebound just a fleeting moment in a bear market rather than the true beginning of a bull market? To answer this question, we must turn the pages of history.

Is it a replay of history or an upgraded script? Comparing the crypto markets before and after the 2019 end of QT

The last time the Federal Reserve announced the end of QT was on August 1, 2019, more than six years ago. The crypto market at that time was vastly different from today.

In the summer of 2019, after experiencing a crash at the end of 2018, Bitcoin surged to $13,970. The market generally believed a new bull run was beginning. But just before the Fed announced the end of QT, BTC had undergone a nearly 30% sharp correction, falling to $9,400. On the day QT ended, Bitcoin rose 6%, and in the following days, it rebounded to the $12,000 level.

However, this upward momentum did not last. Just two months later, on September 26, the crypto market was hit again, with BTC dropping to $7,800. Although there was a brief rebound in October due to policy optimism, the market soon sank into a prolonged bear phase. It wasn’t until March 2020, just before the Fed launched its “unlimited QE,” that the market experienced the unprecedented March 12 crash.

During the same period, the US stock market, represented by the Nasdaq, soared to a record high of 9,838 points in February 2020. This contrast reveals a harsh truth: in the gap between the end of QT and the start of QE, even with favorable stimuli, the crypto market still struggled to escape downward trends. The Fed’s measures to stop the bleeding were far from enough to save the crypto market.

Tenfold scale and steady trend: Why the crypto market under US policy is different

Fast forward to the end of 2024. Bitcoin recently hit a historic high of $126,000 in October, followed by a decline of over 36%. At first glance, the trend seems reminiscent of 2019—both are marked by intense volatility after a bull market. But a closer look reveals fundamental differences.

The most obvious difference is market size. Since 2019, the overall crypto market has expanded tenfold. The composition of market participants has also changed dramatically: what was once a retail-dominated market is now firmly controlled by institutional funds. Public companies embracing crypto treasury strategies and crypto ETFs have become commonplace—what was once news is now routine.

The stability of the trend has also significantly improved. Normalizing the gains of the two-year periods before and after the end of QT in 2019 and 2024, the two cycles show astonishing similarity—142% and 131%, both close to 2.4 times. But the process is entirely different: Bitcoin’s recent two-year trend has been much more stable, no longer experiencing the violent swings seen in the previous cycle.

More critically, the correlation between the crypto market and US stocks has increased substantially. Currently, BTC’s correlation with the S&P 500 remains stable between 0.4 and 0.6, indicating a strong positive correlation. In contrast, during 2019, their correlation ranged from -0.4 to 0.2, almost uncorrelated or even negatively correlated.

This shift warrants deep reflection. Under the logic of strong correlation, capital allocation between US stocks and crypto depends on which is more certain. History repeatedly shows that institutions tend to prefer the lower-volatility tech sector of US stocks over high-risk crypto assets. Essentially, the crypto market has evolved into a risk asset within the US stock ecosystem.

QT is just a stopgap; QE is the real salvation

Since crypto has been integrated into the US stock “circle of friends,” its future trend will inevitably be influenced by macro policies. This leads to a straightforward conclusion: ending QT is not the starting gun for a bull market.

Historical data supports this judgment. After the 2019 QT ended, the crypto market briefly benefited but overall continued to fluctuate downward. It wasn’t until March 15, 2020, when the Fed announced unlimited QE, that the crypto market truly synchronized with US stocks. In other words, QT is a stopgap, while QE is the transfusion. Without QE, ending QT alone is insufficient to reverse the situation.

What are current market expectations? Authorities like Goldman Sachs and US banks predict the Fed will continue to cut interest rates into 2026, with some forecasts indicating two rate cuts in 2026. Deutsche Bank even predicts that QE could restart as early as the first quarter of 2026.

However, Goldman Sachs’ global market outlook published in November also reminds us: “The baseline outlook is mild, markets have priced in expectations, and risks of underperformance should be watched.” In other words, market expectations for QE may already be priced in, and any policy shortfall could trigger a backlash.

Another significant threat comes from the AI industry. Currently, AI has become the most dazzling star in the capital markets, squeezing the attention and capital flow away from crypto. Data shows that among the top ten crypto mining companies, seven have income from AI projects, and the remaining three are actively deploying in AI. The competition and cooperation between crypto and AI will be a key variable in future market resource allocation.

Foggy prospects: opportunity or trap?

Combining historical lessons with current realities, the end of US QT is not a signal of a crypto bull market. The real market turning point still depends on the activation of quantitative easing.

But even if QE arrives as expected, new uncertainties must be considered. The crypto market size is now ten times larger than a decade ago, and its trend has become more stable—meaning that the astonishing tenfold increase may be a thing of the past. Additionally, the rise of AI is reshaping capital flows, and the crypto industry is no longer the undisputed main actor on the market stage.

Under this fog of uncertainty, blind optimism or pessimism is inappropriate. Investors need to continuously monitor the Fed’s policy rhythm, rationally assess the competition between AI and crypto, and remain vigilant about whether market expectations are overly priced in.