After the Federal Reserve declared the withdrawal of its quantitative tightening, Bitcoin rose above the $90,000 mark. The rally suggests an inflow of fresh liquidity into the global markets, which triggered more interest in Bitcoin. More demand for Bitcoin ETFs after the U.S. markets opened also coincided with the boost in BTC price.
Why is Bitcoin Rising Now?
The breakout came during a period of rising optimism across crypto markets. The end of QT removes a major pressure point on liquidity, while the prospect of lower rates boosts appetite for alternative assets.
The U.S. Fed’s injection of $13.5 billion in liquidity as QT ended, adds more momentum to Bitcoin’s surge. Bitcoin’s rally shows how quickly sentiment can flip when monetary policy signals change.
Another significant trigger was when Vanguard declared it would accept trading of crypto ETFs (including BTC, ETH, XRP and SOL) beginning on December 2. This shift has brought in millions of conservative investors in into the crypto market. It is no wonder Eric Balchunas named it the effect ‘The Vanguard Effect.’
Balchunas pointed out that Bitcoin jumped 6% around the U.S. open, which aligned with the moment Vanguard when its customers started trading crypto ETFs.
Will Rising Fed Cut Odds Fuel Even More Bitcoin Inflows?
In addition, funds have been slowly increasing allocations as macro uncertainty eases. The reversal in policy direction improves the outlook for long-duration assets like Bitcoin.
Hence, this shift could support more inflows in the coming weeks. Analysts like Tom Lee also argue that current momentum could push Bitcoin to a new all-time high as early as January.
Bitcoin’s move above $90,000 adds pressure on traders who expected a deeper correction. Almost $135,000,000 in short positions have been liquidated from the crypto market after BTC crossed $90,000, per Coinglass data.
The market will now track upcoming Fed meetings to confirm whether the U.S. central bank will cut rate. Kalshi traders are expecting three rate cuts in 2025 with odds of the third rising to 90%. This indicates that they are confident that the Fed is heading towards significant easing cycle.
Prediction markets now expect three Fed rate cuts.Source: https://coingape.com/bitcoin-surges-above-90k-fueled-after-fed-qt-end/
