The markets are currently agitating around an hypothesis which is gaining momentum: the American Federal Reserve (FED) could put an end to its quantitative tightening program (quantitative tightering, QT) by May. This scenario, which still seemed unlikely a few months ago, is now considered a certainty by the bettors of the Polymarket platform. A decision which, if it materializes, could have major consequences on the Crypto market.
A monetary softening in sight?
Crypto and financial markets are under tension before the Fed decisions. Since June 2022, it has reduced the money supply via QT and increases rates to curb inflation. But faced with budgetary tensions, some officials are concerned about side effects. The minutes of the last committee reveal concerns on the debt ceiling, which can justify a slowdown in monetary tightening.
To this end, on Polymarket, a bet Entitled “Will Fed End Qt Before May?” »Displays a 100 %probability, with an exchange volume exceeding $ 6.2 million. For investors, the end of the QT therefore already seems to be acted, although the Fed has yet made up an formalized.
A bullish catalyst for the crypto market?
The QT judgment 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 showed strong resilience. A more accommodating policy of the Fed could strengthen this upward dynamic, especially since rate reductions are also envisaged for the second half of the year.
However, some Crypto analysts call for caution. The American economy has not yet shown signs of alarming slowdown, and the Fed could decide to delay before modifying its monetary trajectory. If the markets overput the probability of a softening, a brutal correction could follow.
History shows that monetary policy plays a key role in the Crypto market cycles. In the event of confirmation at the end of the QT, the sector could benefit from a new momentum. But a rushed reaction of investors could also amplify volatility, especially with the recent fall in the main altcoins this Monday. Will the verdict fall in the coming weeks, with a key question: will the Fed choose prudence or recovery?
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