Crypto Markets Anticipate Fed’s Potential QE Signal
- Traders assign an 87.2% probability to a 0.25 percentage point rate cut this week.
- Mark Cabana suggests the Fed may announce $45 billion in monthly Treasury bill purchases.
- The potential shift is seen as a move from quantitative tightening (QT) to “reserve management.”
- James E. Thorne highlights concerns over the adequacy of bank reserves and funding stress.
- Macro analysts predict a return of QE in a limited form by early as the first quarter of future years.
As traders anticipate the Federal Reserve’s decision, attention focuses on whether Jerome Powell will signal a shift towards quantitative easing through Treasury bill purchases, which could impact liquidity in crypto markets. This week’s meeting might indicate if the Fed plans to address reserve levels without officially labeling it as QE.
The potential $45 billion monthly Treasury bill purchase program could subtly increase liquidity, affecting risk asset markets like crypto, where total market cap stands at $3.1 trillion.(Source)
