The US Federal Reserve will officially end Quantitative Tightening (QT) on December 1, 2025, freezing its balance sheet at $6.57 trillion after draining $2.39 trillion from the system. This marks a major shift in US liquidity policy as the Fed stops letting its securities mature without reinvestment.
Why the Fed Is Stopping QT
Bank reserves have fallen to about $3 trillion roughly 10% of US GDP raising concerns about tightening liquidity. Meanwhile, the Overnight Reverse Repo (ON RRP) facility has collapsed from $2.5 trillion to near zero, removing a key liquidity buffer.
Funding pressures intensified in October 2025 when the Secured Overnight Financing Rate (SOFR) jumped to 4.25%, above the Fed’s target range. The Standing Repo Facility was tapped for $18.5 billion in a single day, signaling elevated demand for short-term liquidity.
FOMC minutes from October 29 confirmed the decision:
“The Committee decided to conclude the reduction of its aggregate securities holdings on December 1.”
Crypto Market Impact: Analysts See 2019-Like Setup
Analysts highlight strong similarities to 2019, when a QT pause coincided with an altcoin bottom and a sharp
Bitcoin rally. With interest rates already reduced to 3.75%–4.00%, rising liquidity and improving repo conditions could set the stage for:
- Early signs of a new altseason
- Upside momentum for Bitcoin
- Supportive growth in M2 money supply
Fed’s Broader Concerns
The Fed notes that downside risks to employment have increased, even though joblessness remains low. Inflation is still “somewhat elevated,” making a stable balance sheet important for smoother policy transmission.
With QT ending and liquidity stabilizing, markets are watching for shifts across equities, credit, and especially crypto as the US financial system moves into a new phase.
