What’s Next For The Crypto Bubble? Fed’s Liquidity Push Gives Signs

US Federal Reserve Chairman Jerome Powell recently stated that the Fed will soon expand its balance sheet again — effectively preparing for a new phase of quantitative easing. 

The news sent crypto investors into a frenzy in anticipation of a surge in fresh liquidity. At the same time, skeptics warned that it could inflate a dangerous bubble.

The Federal Reserve has recently announced the conclusion of its quantitative tightening program, confirming plans to halt balance-sheet reductions as of December 1.

“Our long-stated plan has been to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” Powell said at a recent press conference. “Signs have clearly emerged that we have reached that standard in money markets,” he added.

Though he described this as a “technical adjustment,” such a move would still inject liquidity into markets– a clear form of monetary easing. 

The move signals a subtle shift in policy, from focusing on lowering inflation to prioritizing market stability. This psychological turning point can quickly reignite risk appetite, causing investors to return to speculative assets.

With the Fed reopening the liquidity taps, crypto is going to be one of the first destinations for excess capital. The renewed balance-sheet expansion will inject cash into the system, lower financing costs, and fuel appetite for higher-risk assets.