Boom To Come? The End Of Monetary Tightening Could Propel Crypto!

The markets are currently buzzing around a growing hypothesis: the American Federal Reserve (FED) may end its quantitative tightening (QT) program by May. This scenario, which seemed unlikely just a few months ago, is now considered a certainty by bettors on the Polymarket platform. A decision which, if it materializes, could have major consequences on the crypto market.

A monetary easing in sight?

The crypto and financial markets are under pressure ahead of the FED’s decisions. Since June 2022, it has been reducing the money supply via QT and raising rates to curb inflation. However, faced with budgetary tensions, some officials are concerned about the side effects. The minutes from the last committee reveal concerns about the debt ceiling, which could justify a slowdown in monetary tightening.

In this regard, on Polymarket, a bet titled “Will Fed end QT before May?” displays a probability of 100%, with a trading volume exceeding $6.2 million. For investors, the end of QT seems to be already established, even though the FED has not yet made anything official.

A bullish catalyst for the crypto market?

The end of QT would mean a gradual return of liquidity to the financial markets, a signal generally favorable to risky assets, including cryptos. In 2023 and 2024, despite a restrictive environment, Bitcoin has shown strong resilience. A more accommodative policy from the FED could reinforce this bullish dynamic, especially since rate cuts are also being considered for the second half of the year.

However, some crypto analysts call for caution. The American economy has not yet shown any alarming signs of slowdown, and the FED may decide to temper before altering its monetary trajectory. If the markets overestimate the likelihood of easing, a sharp correction could follow.

History shows that monetary policy plays a key role in crypto market cycles. Should the end of QT be confirmed, the sector could benefit from a new momentum. However, a hasty reaction from investors could also amplify volatility, especially with the recent drop of major altcoins this Monday. The verdict will come in the coming weeks, with a key question: will the FED choose caution or stimulus?