What does the end of Fed's QT mean? Is the crypto market really about to take off?

December 1, 2024, the Federal Reserve officially announced the end of its Quantitative Tightening (QT) policy. In simple terms, QT means that the central bank actively reduces its balance sheet by stopping bond purchases and allowing maturing bonds to expire naturally, thereby withdrawing liquidity from the market. This is the opposite of the previous Quantitative Easing (QE) policy—where the central bank actively injects liquidity into the market. When the Fed announced the end of QT, the market immediately surged, with BTC rising over 8% within 24 hours, climbing back above $93,000, and ETH approaching a 10% increase, regaining the $3,000 level. Even competing coins like SUI and SOL surged over 20%. For a moment, the market shifted from silence to celebration, with everyone wondering: Is a new liquidity wave really coming?

But many voices have broken this optimism. Some believe this is just a fleeting glow in a bear market; a short-term rebound does not mean a new trend is coming. So, will the end of QT truly bring different market conditions in history? Let’s look back.

Historical Lessons: What Happened After the 2019 QT Ended

The last time QT ended was on August 1, 2019, more than six years ago. Let’s turn back time to that summer.

In the first half of 2019, the crypto market had just completed a small bull run. After the crash at the end of 2018, BTC rebounded to around $13,970. Although it hadn’t yet reached the 2017 high of $19,000, the market generally believed a new bull cycle was about to start. Major news such as the Libra project and the launch of physically settled futures on Bakkt boosted market confidence.

On July 31, the Federal Reserve announced it would officially end its QT program the next day. Before the announcement, BTC had experienced a nearly 30% correction, falling to $9,400. After the Fed announced the halt of QT, the market rose by 6%, and within days, BTC returned above $12,000. It seemed that ending QT indeed stimulated the market.

However, this optimism did not last long. On September 26, the crypto market plummeted, with BTC dropping to a low of $7,800. Although China’s blockchain policy favorable news in October briefly boosted the market, the subsequent trend was a continued bear market with oscillations and panic. Ultimately, on the eve of the COVID-19 pandemic outbreak and the Fed’s unlimited QE, the crypto market experienced an epic crash of 3.12.

Interestingly, the US stock market performed quite the opposite. The Nasdaq index steadily rose from August 2019 to February 2020, continuously hitting new highs, peaking at 9,838 points. Only when the pandemic truly hit and panic spread did both the stock and crypto markets crash together.

This teaches us a harsh reality: the end of QT itself is not a savior. The crypto market was briefly boosted by positive stimuli, but before QE truly started, it quickly resumed its downward trend. The crypto market seemed more waiting for real “blood transfusion”—that is, quantitative easing—rather than just “stopping the bleeding.”

Today Is Not the Same: Changes in Market Scale and Structure

So, is there really such a big difference between the end of 2024 and 2019?

On the surface, both situations seem similar. In October 2025, BTC hit a record high of $126,080, then experienced a sharp correction of over 36%, and is now oscillating around $90,290. The price charts show some cyclical similarities to 2019—both are large shakeouts after a bull market. This phase could either be the start of a bear trend or a mid-bull market pause.

But a deeper comparison of data reveals significant differences.

First, market recognition. In 2019, the crypto market was still largely ignored by traditional financial investors—any involvement by big companies or institutions would excite the market greatly. By 2024, listed companies holding crypto assets and crypto ETFs are commonplace. Institutional investors have fully taken over the market, and the era of retail dominance is gone. This is directly reflected in market size—the total crypto market cap has grown tenfold since 2019.

Second, volatility characteristics. If we normalize the two-year trend before the 2019 QT end and compare it with now, an interesting phenomenon emerges: the two rally phases are quite similar—142% in 2019 and 131% now—both roughly 2.4 times growth. But the process is entirely different. Over the past two years, BTC’s price movement has been noticeably more stable, with less of the previous wild swings, resembling a mature asset.

The most critical change is the correlation with the US stock market. In 2019, BTC’s correlation with the S&P 500 was roughly between -0.4 and 0.2, meaning they were almost uncorrelated or even negatively correlated at times. Now, this correlation has stabilized between 0.4 and 0.6, indicating a strong correlation. Cryptocurrencies are becoming “high-tech concept stocks” within the US stock market.

This raises a question: when the Fed announced the end of QT on December 2, 2024, the US stock market (Nasdaq) was already recovering, approaching its previous high of 24,019 points. Meanwhile, BTC’s performance was relatively weaker, with larger retracements and weaker rebounds. This reflects that, under the game of existing capital, investors tend to prefer more certain US tech stocks over more volatile crypto assets.

QT is Not the Starting Gun; the Real Savior is QE

Since BTC follows the US stock market, and other coins follow BTC, the future of the crypto market depends even more on macroeconomic changes. As “followers,” the crypto market alone cannot rely on policies like ending QT as a “stop-loss” measure; what the market truly craves is substantial “blood transfusion”—that is, quantitative easing.

From 2019 experience, after QT ends and before QE begins, the crypto market may experience a brief rebound, but the overall trend remains downward. It is only after the Fed announced unlimited QE on March 15, 2020, that the crypto market entered a genuine upward channel, following the US stock market.

Currently, although QT has ended, the Fed has not officially entered QE. However, mainstream financial institutions are leaning towards easing—Goldman Sachs, Bank of America, and others expect the Fed to continue cutting rates into 2026, with some predicting more than two rate cuts in 2026. Deutsche Bank is more aggressive, forecasting QE could restart as early as Q1 2026.

But this expectation carries risks. Goldman Sachs, in its November 2026 global market outlook, explicitly warned: “Markets have already priced in these expectations; caution is needed for unexpected risks.” In other words, when QE actually begins, the market may have already priced in these benefits, leaving limited surprises.

Another noteworthy point is that the current crypto market’s hot topic has been completely overtaken by AI. In November, among the top ten crypto mining companies by hash rate, seven have shifted from crypto to AI and high-performance computing projects, generating revenue. The remaining three plan to follow suit. This indicates that even with ample liquidity, the crypto market is no longer the top priority for capital. AI is the current darling.

Final Thoughts: QT Means More Than Just Policy

So, when we reinterpret “the meaning of QT”—not just as the definition of quantitative tightening, but as the market logic behind this policy—we realize that: the end of QT itself does not determine the direction of the crypto market. The real factors are when QE starts, capital flows, and changes in the industry competitive landscape.

Based on historical experience and current reality, the end of QT does not seem to be the horn for a new bull run. The real turning point should be the official start of quantitative easing.

And even if QE begins as expected, the crypto market faces a series of new variables: the market size is already ten times that of six years ago, the trend has become more stable, and the growth potential that once multiplied tenfold has been greatly compressed. Cryptocurrencies are no longer the most dazzling stars on the market stage but have become supporting actors that fluctuate with the US stock market. Rather than blindly optimistic or pessimistic, it’s better to calmly observe policy rhythms, capital flows, and industry competition changes—these are the key variables ultimately determining the crypto market’s trajectory.