QT ends, when will QE begin? The crypto market is waiting for the real liquidity gateway.

The Federal Reserve announced the end of quantitative tightening (QT) policy by the end of 2024, and the market immediately experienced a collective rebound. However, the sustainability of this rally is highly questionable. Some believe that the end of QT will usher in a new bull market, while others worry that this is merely a fleeting glow within a bear market. To answer this question, we need to review history, examine the true trajectory of the crypto market after QT ends, and understand the real power of the key policy—quantitative easing (QE).

Market Reaction to Policy Shift

When the Federal Reserve officially announced the cessation of QT, crypto assets responded with an immediate surge. BTC briefly rose above $90,000, ETH broke through the $3,000 mark, and competing coins like SUI and SOL also surged accordingly. This rapid response reflects the market’s expectation of liquidity easing.

However, the implications behind this phenomenon warrant deeper reflection. Ending QT is essentially a “stop-loss” policy—the Fed halts balance sheet reduction, but this does not directly inject new funds into the market. In contrast, true “blood transfusion” would be the initiation of quantitative easing, where the Fed releases liquidity into the market through asset purchases. Understanding this distinction is crucial, as it determines the subsequent market trajectory.

Lessons from History: The 2019 QT End

The last time QT ended was in August 2019, over six years ago. The scene then feels familiar: Bitcoin gradually recovered after the 2018 end-of-year crash, reaching a high of $13,970. Market expectations for a bull run peaked, believing a new breakout was imminent.

In late July 2019, the Fed announced the end of QT. In the following weeks, Bitcoin indeed rebounded, briefly surpassing $12,000. But this upward momentum was short-lived. By September, the market experienced a sharp decline, with BTC falling to $7,800. Over the subsequent months, despite some policy positives (such as China’s blockchain policies in October), the crypto market remained volatile and mired in panic.

The real turning point came after March 15, 2020. When the Fed announced the launch of “unlimited QE,” the market entered a sustained upward cycle. This indicates that during the window between QT ending and QE starting, the market lacked sustained support.

Market Structure Has Changed

Compared to 2019, the fundamental aspects of the crypto market have undergone profound changes, which could alter the impact of QT ending.

First, the market size has expanded tenfold. In 2019, the crypto market was still a niche dominated by retail investors, whereas today it has become a key asset class for institutional capital. Corporate adoption strategies, crypto ETFs, and institutional involvement have increased market stability.

Second, the correlation between Bitcoin and US stocks has risen significantly. In 2019, BTC had little correlation with the S&P 500 (correlation between -0.4 and 0.2), but now it has stabilized between 0.4 and 0.6, indicating a strong correlation. This suggests Bitcoin has gradually evolved into a “risk asset” within the equity ecosystem rather than an independent asset.

Third, Bitcoin’s price movements have become more stable. Comparing the trends before and after 2019 and 2023-2025, although the gains are similar (142% and 131%, both roughly 2.4 times), recent cycles show much smoother volatility. This reflects increased market capacity and more institutional participation, bringing greater stability.

However, these changes are not all positive. The stronger correlation with US stocks means the crypto market is increasingly dependent on macroeconomic conditions. When macro risk assets face pressure, Bitcoin often bears the brunt. Meanwhile, the crypto market is no longer the main actor on the stage—AI’s rise is attracting attention and capital that might otherwise flow into crypto.

QE Is the True Game Changer

Based on historical experience and current realities, the end of QT is far from a green light for a bull market. The real game changer is the initiation of quantitative easing.

Currently, although QT has ended, the Fed has not yet entered QE. However, mainstream financial institutions generally forecast that easing policies will intensify by 2026. Goldman Sachs, Bank of America, and others expect the Fed to continue cutting rates into 2026, with some predicting two rate cuts in that year. Deutsche Bank even forecasts that QE could restart as early as Q1 2026.

These expectations have been somewhat priced into the markets. Goldman Sachs warns in its 2026 global market outlook that the anticipated easing may have already been factored into current prices, and if policies fall short of expectations, risks will increase. This suggests that markets may have already priced in the most optimistic scenarios, leaving limited room for surprise-driven upside.

New Variable: The Shadow of AI

Even if QE proceeds as scheduled, the growth prospects for the crypto market are shrouded in uncertainty. Unlike 2019, when markets were excited about new applications like Libra and Bakkt, today’s focus has shifted to AI.

Recent data shows that among the top ten crypto mining companies by hash rate, seven have already generated revenue from AI or high-performance computing projects, and the remaining three plan to follow suit. This indicates that even within the crypto ecosystem, participants are diversifying resources to seek new growth engines. This shift is likely to dampen the crypto market’s capacity to absorb liquidity.

Uncertain Outlook

Synthesizing historical experience, current realities, and new market variables, the following points are clear:

First, the end of QT will not directly trigger a new bull market. The market requires more substantial policy stimulus—namely, the start of QE—to generate sustained upward momentum.

Second, even if QE proceeds as scheduled, the crypto market may not replicate the past tenfold growth. The market size has increased tenfold, and the trend has become more stable; diminishing marginal returns are a natural part of market development.

Third, the rising correlation between crypto and macroeconomics means future performance will depend more on overall economic conditions and policy environments rather than independent innovation within crypto.

Finally, the rise of AI is reshaping capital allocation priorities, and the crypto market must adapt from being the “main actor” to a “supporting role.”

In this context, excessive optimism or pessimism is inappropriate. Market participants should patiently wait for the true initiation of QE and adopt a more rational view of the crypto market’s role in the new era.