Jerome Powell Hints at Quantitative Easing by the End of This Year

• Powell pointed out that it’s becoming harder for banks to access cash, like in the case of higher short-term lending rates
• The Fed has already reduced its holdings significantly, from about $9 trillion at peak to around $6.6 trillion
• Ending QT means the Fed may stop draining cash from the system, which can relieve pressure on assets that suffer under tight liquidity, like stocks, bonds, and cryptocurrencies

In a speech at the National Association for Business Economics in Philadelphia, Fed Chair Jerome Powell indicated that the Fed may approach the end of its balance-sheet reduction program (quantitative tightening, or QT) in the coming months.

He pointed out that it’s becoming harder for banks to access cash, like in the case of higher short-term lending rates. This suggests the Fed is nearing a point where further runoff may become too risky for market stability.

Citing lessons from 2019, Powell reaffirmed that the Fed would act deliberately and cautiously, avoiding abrupt moves that could disrupt money markets. It has already reduced its holdings significantly, from about $9 trillion at peak to around $6.6 trillion.

Related: Fed’s First Rate Cut of 2025 Lifts DeFi: Ondo, Hyperliquid, and Uniswap Stand Out

In adjusting its approach, the Fed has slowed the pace of QT in 2025. For instance, since April 2025, the central bank has limited monthly treasury redemptions to $5 billion, compared to higher runoffs earlier.

It didn’t take long for the market to respond to Powell’s comments. Yields on US treasuries dropped and the US dollar weakened slightly, probably due to investors interpreting the possible end of QT as a loosening of monetary restraint.

Why is this potentially bullish for crypto?

Ending QT means the Fed may stop draining cash from the system, which can relieve pressure on assets that suffer under tight liquidity, like stocks, bonds, and cryptocurrencies. 

With QT winding down, interest rate cuts may look more likely, resulting in improved borrowing conditions and pushing capital toward risk assets, which again includes crypto.

Additionally, when the Fed stops pulling liquidity, the extra interest that investors demand for taking on risk tends to fall. This makes riskier investments (such as crypto) look more attractive by comparison.

Related: Will Powell’s Speech or the FOMC Minutes Decide the Market’s Next Direction?

It’s also worth noting that the crypto prices tend to move more dramatically based on the overall economy. An environment of easing monetary policy can cause a surge of investment into crypto, especially from large funds that are already paying close attention to economic indicators and looking for new places to put their money.

However, Powell didn’t commit to a firm stop date, only that it may come in the “coming months” depending on indicators.