Many people become nervous when they see the Fed's Reserve Management Purchases (RMP) starting in December 2025, thinking a new round of QE is coming. In fact, this is a typical misinterpretation—confusing liquidity operations with policy shifts.

**The core logic is simple: expanding the balance sheet ≠ loosening monetary policy**

From December last year to April this year, the Fed's balance sheet expansion was mainly technical operations aimed at maintaining reserve levels, responding to economic growth fluctuations and seasonal liquidity gaps. Basically, it's like banks adjusting their positions—part of daily management, not a change in policy stance.

So, what's the difference between RMP and QE? They may seem similar in expanding the balance sheet, but their nature is completely different—RMP is a market-neutral maintenance tool designed to keep interest rates within the target range set by the central bank. QE, on the other hand, is a true unconventional measure, activated only during crises, aiming to break through the zero lower bound and actively lower long-term interest rates to stimulate the economy.

Simply put: RMP maintains the status quo, QE rescues from crises.

**When will the Fed truly start QE? Look at the hundred-year history and you'll understand**

Historically, QE that significantly expanded the balance sheet has only occurred at four key points—The Great Depression in 1929, U.S. entry into WWII in 1941, the Lehman crisis in 2008, and the COVID-19 pandemic in 2020. A particularly important commonality: each time, it only started after interest rates had already fallen to zero.

In other words, when there is still room to cut rates, the Fed is unlikely to deploy QE quickly. The next QE launch will probably have to wait until the economy is truly plunged into a new major crisis.

**What does this mean for market participants?**

Don't overly rely on changes in the size of the balance sheet over the past two years. During normal monetary policy cycles, interest rates are the real indicator. Blindly predicting asset prices based on the pace of balance sheet expansion is like pre-2008—markets simply didn't take the Fed's balance sheet seriously, and assets still fell as expected.

The same applies to the crypto market. The key is to watch how interest rate policies evolve, not be fooled by the numbers on the balance sheet. Geopolitical risks, economic growth anomalies, and shifts in Fed stance are the real dangers to watch out for.