Bitcoin Braces for Potential 35% Plunge as Fed Winds Down Quantitative Tightening in December
Markets shudder as Bitcoin faces its moment of truth
The Fed's December QT phase-out triggers crypto anxiety
Quantitative tightening's endgame spells trouble for digital gold
35% correction looms - just another Tuesday in crypto land
When central bankers sneeze, Bitcoin catches pneumonia. Because nothing says 'decentralized' like trembling before Fed announcements.
- Bitcoin price is at $110,073 with a market cap of $2.20 trillion and a dominance level of 58.26%.
- Fed will end QT on December 1 after a 25 bps rate cut, recalling the 35% price decline of 2019.
- Analysts predict a possible ‘bearish crossover’ in the MACD chart, although targets are still set at $130K-$180K by 2026.
Currently, the Bitcoin (BTC) is trading at $110,073, up by 0.35% within the last day. Its market cap stands at $2.20 trillion, with a trading volume of $86.55 billion. BTC now represents an impressive share of the total global crypto market cap at 58.26%.
Bitcoin Market Reflects on 2019 QT Decline
The U.S Federal Reserve revealed it will be discontinuing quantitative tightening from December 1 and reinvest in Treasury securities after a rate cut by 25 basis points. According to recent post by crypto News Hunters, this signals a policy shift aimed at restoring liquidity and stimulating financial market stability.
NEWS: The Fed will stop quantitative tightening (QT) on December 1 and resume investing in treasury bonds after a 25 point rate cut.
In 2019, BTC dropped 35% after QT ended.
#FedChair #BreakingNews #CryptoNews #WorldNews #Investing pic.twitter.com/zI05Zv1PXL
Market response to the transition has remained mixed. Investors are recalling 2019, when Bitcoin plunged 35% after QT ended. Despite a bullish stock market, the price of Bitcoin dropped considerably, indicating the possible repetition of past trends with the Fed resuming the process of easing after the period of tightening.
From December 1, the Fed will halt shrinking its bond portfolios and start reinvesting its matured securities in short-term Treasury bills. This MOVE means that when old bonds mature, the proceeds will be used to buy new debt instead of reducing the money supply, sustaining liquidity levels.
During the year 2019, after the Fed ended the QT process and started reducing interest rates, the price of bitcoin dropped substantially. Analyst Brett highlighted that BTC did not recover until early 2020, after the Fed started the process of quantitative easing due to the COVID pandemic.
“I would say we’re at peak of the 4 year cycle now though…which may not be any better,” BRETT said. His comments reflect cautious optimism, indicating possible short-term pain preceding the eventual rebound fueled by the liquidity conditions prevailing in the markets worldwide.
Correct. It did that in the start of the bull run. I WOULD say we’re at peak of the 4 year cycle now though…which may not be any better.
If we get QE, I don’t see it happening until late next year.
Technical Indicators Signal Possible Bearish Momentum
Analyst Jesse Olson observed a ‘Pending Bearish MACD Crossover’ on the three-week chart for Bitcoin. Indicators such as this have triggered a ‘69% market correction in the past for the year 2021 & 2022.’
Economist Lyn Alden mentioned that reinvesting maturing debt into Treasury bills indirectly adds new money to the system. This expands cash reserves for banks and funds, boosting market liquidity even if the Fed avoids labeling the policy as quantitative easing in official communications.
It’s money printing.
Whether it’s QE or not is more semantics. Fed won’t call it QE since it’s not duration and it’s not for economic stimulus.
Analyst Bedouin expects that Bitcoin remains bullish, projecting that possible prices could hit $130,000 to $180,000 by the year 2026. He believes expanding liquidity will outweigh cycle-driven corrections. His sentiments are echoed by the forecasts from JPMorgan and Standard Chartered, which foresee increases in BTC price.
