Powell Hints at Possible End to QT; Bitcoin May See Brief Rebound as Market Stays Cautious

• Fed may slow balance-sheet runoff soon, signaling reduced liquidity pressure for crypto.

• Crypto response: short-lived BTC/ETH rebounds amid muted overall market sentiment.

• Market data: total crypto market cap ~$3.84 trillion and daily volumes near $257 billion (CoinMarketCap).

Powell balance-sheet runoff: Fed hints at slowing QT, easing liquidity for crypto; market impact, data-driven outlook and next CPI risks. COINOTAG report.

Published: 14 October 2025 | Updated: 14 October 2025 | By COINOTAG

What is Powell’s balance-sheet runoff signal?

Powell balance-sheet runoff describes the Federal Reserve reducing the pace at which it lets securities roll off its balance sheet. On 14 October 2025, Fed Chair Jerome Powell said the Fed “may approach that point in coming months,” indicating a potential slowdown in quantitative tightening (QT) that could ease liquidity conditions relevant to crypto markets.

How does Powell’s comment affect crypto markets?

Powell’s comment introduced a modestly dovish tilt. The signal suggests less downward pressure on dollar liquidity and Treasury yields if the Fed slows runoff. Crypto assets like Bitcoin and Ethereum briefly rallied on the news, though the move was measured because Powell reiterated a “meeting-by-meeting” approach and did not promise policy easing.

Market context: the total crypto market capitalization was approximately $3.84 trillion, with daily trading volumes of nearly $257 billion, per CoinMarketCap. These figures underline that while liquidity signals matter, market positioning and macro data remain primary drivers.

Powell suggests QT is nearing its end

Speaking at the 67th Annual Meeting of the National Association for Business Economics (NABE) in Philadelphia, Powell framed the balance-sheet discussion as technical and conditional rather than policy-changing. His remark that the Fed “may approach that point in coming months” implies a potential pause in runoff once reserve levels are judged adequate.

The immediate market takeaway: a potential slowdown in QT can reduce upward pressure on yields, which historically supports risk assets. Still, Powell was explicit that this is not a signal of imminent rate cuts; decisions remain data-dependent.

Market reaction and sentiment

Bitcoin and Ethereum recorded short-lived rebounds following the speech, but broader sentiment stayed cautious. The CMC Fear & Greed Index registered 42 (Neutral), up slightly from 40 the prior day but well below last week’s 62 (Greed). Readings below 50 typically reflect risk aversion, indicating traders remain hesitant to take large positions despite improved liquidity signals.

Source: CoinMarketCap

Investors are parsing Powell’s language for nuance. A slowdown in runoff would be supportive for risk assets, but the market is also watching for follow-through in macro data—especially inflation prints—that would confirm any sustained easing of financial conditions.

Sentiment turns neutral after Powell speech

Despite a less-hawkish tone, investor psychology has not swung decisively positive. The CMC Fear & Greed Index at 42 points to neutrality and continued risk aversion. This mirrors the broader macro backdrop: mixed inflation signals and unresolved fiscal and geopolitical influences sustain caution among traders.

Source: CoinMarketCap

Outlook

Near-term price direction will hinge on incoming macro releases and whether the Fed follows through on a QT slowdown. Next week’s CPI release—subject to delay related to U.S. government processes—will be particularly important. If inflation shows sustained softening and the Fed confirms a reduction in runoff pace, crypto could regain momentum into late October.

For now, Powell’s tone offers a tactical pause rather than a strategic pivot. Market participants should treat any gains as tentative until the data stream confirms a durable easing in financial conditions.

Frequently Asked Questions

Will slowing the balance-sheet runoff lead to lower interest rates?

Not immediately. A slowdown in runoff eases liquidity pressures and can lower yields, but Powell emphasised a meeting-by-meeting approach; rate decisions remain data-dependent. Any decision on cuts would follow consistent evidence of lower inflation and weaker economic momentum.

How should crypto investors react to Powell’s comments?

Focus on risk management. Powell’s comments reduced short-term liquidity risk but did not guarantee a policy pivot. Investors should monitor CPI, Treasury yields, and positioning indicators like the Fear & Greed Index before increasing exposure.

Key Takeaways

• Fed signal: Powell indicated the Fed may slow balance-sheet runoff in coming months, hinting at eased liquidity pressure.
• Market reaction: BTC and ETH saw brief rebounds, but overall sentiment stayed neutral (CMC Fear & Greed Index: 42).
• Next steps: Watch CPI and Treasury yields—data will determine whether the Fed’s pause becomes a broader easing cycle.

Conclusion

Powell’s remarks on the balance-sheet runoff produced a modestly dovish shift that briefly supported digital assets, but the Fed made clear this is a conditional pause rather than a policy reversal. Market participants should monitor inflation data, Treasury yields, and liquidity indicators. COINOTAG will continue to track developments and publish updates as new data emerges.