The Fed turns the tap back on: Is crypto preparing to take off as the storm forms?

The Unexpected Turnaround (But Everyone Saw It Coming)

Jerome Powell just signaled what markets have been waiting for months: the Federal Reserve is about to abandon its contraction policy and start pumping liquidity back into the system. The official decision came in the form of a “technical adjustment”—an innocuous-sounding term that actually marks a turning point in U.S. monetary strategy.

The world’s leading central bank confirmed the end of the balance sheet reduction program (QT) starting December 1st. As Powell himself stated: “We have reached the standard that we consider consistent with conditions of ample reserves in the money markets.”

Although they presented it as a minor administrative change, anyone who understands money knows exactly what it means: a new round of quantitative easing (QE) is on the way.

Crypto Under the Dollar Rain: The Party Is About to Begin

For digital assets, this news is practically champagne. When the Fed opens the taps, excess capital doesn’t stay in term deposits—it seeks the next frontier, and crypto is always the favorite destination.

Bitcoin and Ethereum will act as magnets for this wave of fresh liquidity. Market historians already know: in previous QE cycles, speculative assets not only rise—they explode. Altcoins and meme coins will follow the bullish pulse with even more volatility.

The narrative resurges: “Money doesn’t disappear, it just mutates.” Investors will once again see cryptocurrencies as the perfect hedge against looming inflation, even if officially it’s “controlled.” The return of this mindset could trigger a short-term rally as powerful as we haven’t seen since 2020—buying risk aggressively while the system still holds.

The Dark Side: When Liquidity Turns Explosive

But here’s the problem: injecting more money into an economy already boiling is playing with fire.

Stocks are already soaring to all-time highs, unemployment is at lows, inflation still lurks. Adding quantitative easing to this mix is the classic recipe for inflating a bubble of epic proportions.

Ray Dalio, the legendary hedge fund manager, didn’t hold back. His warning was explicit: “The upcoming QE would occur within a bubble, not during a crisis—like it did before.” The difference is crucial. In 2008 and 2020, easing was emergency medicine. Now it would be gasoline on an already out-of-control fire.

When—and it’s not “if” but “when”—inflation re-emerges strongly, the Fed will have to tighten the reins again. That moment will be the turning point. The liquidity fueling euphoria today will evaporate quickly. Leveraged excesses will be exposed. Stock, bond, and crypto sell-offs will be relentless.

The Investor’s Dilemma: Short-lived Party or Long-term Ruin

What seems like an endless rally today could be remembered as the last wave of optimism before the collapse. Rising reserves, massive fiscal deficits, and reckless speculation are ingredients for a scenario that ends badly.

For crypto: yes, it will probably rise significantly in the coming months. But building on shifting sands is risky. The real question isn’t whether there’s money available now, but when it will run out and how fast it will disappear.

Those who played well in 2020 made fortunes. Those who didn’t know when to exit lost theirs too.