Battered BTC Market looked at the Federal Reserve for support, Bofa predicts the end of QT
As Bitcoin (BTC) looks like to recover from its Recent collapseObservers are looking for Wednesday’s Federal Reserve (FED) decision to offer support, with some say that an announcement to terminate the sheet balance program, known as the volume, can be positive news for the market.
The Fed will announce the review of its rate at 18:00 UTC, followed by a press conference of chairman Jerome Powell half an hour later.
The bank is not likely to offer any surprises in front of the interest rate, maintaining the current range of 4.25% to 4.50%. Therefore, the focus is on how policy manufacturers plan to continue the volume of the tightening program, given concerns that may affect the system’s liquidity while treasury grapples with a continuous debt ceiling issue. In addition, the summary of economic projections can be watched by markets.
Since June 2022, the Fed, under the QT program, has gradually revoked its balance, which has been a record of a $ 9 trillion post covid when the bank bought trillion dollars worth of property, including bonds, to support markets.
The minutes of the January Fed meeting showed policy manufacturers discussed the pause or slowing back of the sheet balance that greased the crypto bull market of 2020-21. Thus, the possibility of Powell indicating the same later today may not be decided.
“Late last year, Fed Chair Powell said the end of QT would come in 2025. If he mentioned this in the statement tomorrow (Wednesday) or press conference (I think someone he will be asked), which will end up signing that we are in a new financial regime, and that the Fed is ready to continue additional debt purchases should be QE, “Noelle Acheson, with -set of Crypto is Macro now newsletter said in the edition of Tuesday.
“While the revised QE (volume of emergence) is unlikely at any time, further liquidity from a large consumer (the Fed) returns to the market to replace the talented handling will be good news,” Acheson added, noticing that the end of QT would be a timely transition to prevent the liquidity that glitches in the Treasury market that faces $ 9 trillion this year.
New York Life Investments’ economist Lauren Goodwin pronounced by a similar opinion.
The entrepreneurs on the decentralized betting platform Polymarket See a 100% chance that Fed will end the QT program before May. Both estimates will be resolved in “yes” if the central bank increases the amount of security it holds for the week-to-week-end by the end of April.
Bank of America predicts the end of QT
Many investment banks, including Bank of America, are expected to end the Fed at a meeting characterized by an uncertain economic view that is primarily derived from President Donald Trump’s trade tariffs.
“Our strategists expect the statement to indicate that the Fed stopped at QT until the debt ceiling was resolved, as suggested in the minutes of the January meeting. They did not expect to be restored again after meeting the ceiling of the debt, but the announcement said.
A pause in QT can put down pressure on the yield in the 10-year Treasury note of the US, the so-called rate without risk, that galvanizing demand for riskier assets.
Watch Stagflation hints
Trump’s tariffs have changed inflation risks while posing risks to economic growth, a Stagflationary situationAnd the summary of the Fed of Economic Projections (SEP) may reflect there. A stagflation nod may mean a delay in further rates, which potentially limits bitcoin acquisitions from a QT -pause announcement.
According to ACheson, the chances of a stagflationary organization in the SEP – lower GDP projections and higher PCE estimates, with more policy manufacturers mentioning reverse inflation risks – are high.
“If, in fact, we get the stagflationary shift in the official hope, the market is not likely to be fun. In some sizes, they are starting to be priced -but confirmation that the Fed is likely to push rate cuts even more will be surprised by counting on the scandal,” ACheson said.
The recently released sales in the US retail and regional manufacturing indices revealed signs of economic weakness, meanwhile, forward inflation metrics are rising, likely to adjust to Trump’s tariffs.
The Bank of America is best: “The combination of signal from the latest data and policies conducted to the present should result in decreasing the growth of the Fed and upgrading inflation this year, a small nod to stagflation.”
“Dot the dot should still show two cuts in ’25 and ’26,” the investment bank added.
