As Bitcoin (BTC) seeks to recover from their recent recession, the observers are looking for the Federal Reserve (FED) Wednesday rate to offer support, and some say that an announcement to put an end to the Balance Escortía program, known as quantitative adjustment, could be positive news for the market.
The Fed will announce its rate review at 6:00 p.m. UTC, followed by the press conference of President Jerome Powell, half an hour later.
It is unlikely that the bank offers surprises in the front of the interest rate, retaining the current range of 4.25% to 4.50%. Therefore, the approach will focus on how those in charge of formulating policies plan to proceed with the quantitative adjustment program, given the concerns that it could affect the liquidity in the system, while the treasure dealt with the problem of the roof of the ongoing debt. In addition, the markets will monitor the summary of economic projections.
Since June 2022, the FED, under the QT program, has slowly reduced its balance, which had approached a $ 9 billion record after Covid when the bank bought billions of dollars in assets, including bonds, to support the markets.
The minutes of the January Fed meeting showed that the policy formulators discussed the pause or deceleration of the reversal of the expansion of the balance that greased the crypto market of 2020-21. So, the possibility that Powell hints the same later today cannot be ruled out.
“At the end of last year, the president of the Fed, Powell, hinted that the end of the QT would arrive in 2025. If he mentions it in the morning [Wednesday’s] Declaration or Press Conference (I imagine someone He will ask him), that would end up pointing out that we are in a new monetary regime, and that the Fed is ready to resume the purchase of additional debt in case it is necessary again, “said Noelle Acheson, author of the cryptographic, said the Macro bulletin now in Tuesday’s edition.
“While renewed that [quantitive easing] It is unlikely that soon, the additional liquidity of a large buyer (the Fed) that returns to the market to replace mature holdings would be good news, “added Acheson, pointing out that the end of QT would be a timely movement to avoid liquidity failures in the treasure market that faces $ 9 billion in the maturity of the debt this year.
New York economist Life Investments, Lauren Goodwin, expressed a similar opinion, saying that a slightly prior end to the runoff of the balance sheet could provide the market with a sign of modification that is looking for.
Merchants on the Polymercado decentralized betting platform see a 100% chance that the Fed ends the QT program before May. Betting on the same will be resolved in “yes” if the Central Bank increases the amount of values it owns per week in the end of April.
Bank of America predicts the end of QT
Several investment banks, including Bank of America, expect the Fed to end the QT at a meeting characterized by an uncertain economic perspective mainly derived from the commercial rates of President Donald Trump.
“Our rates strategists hope the statement indicates that the Fed is stopping the QT until the debt roof is resolved, as suggested in the minutes of the January meeting. They do not expect to restart after the debt roof is addressed, but the announcement will not be made until the end of this year,” said the March 14 of March 14 of the Bank of America.
A pause in QT could exert a downward pressure on the performance in the United States Treasury note to 10 years, the so -called risk -free rate, galvanizing the demand for more risky assets.
Beware of Stagflation’s suggestions
Trump tariffs have accelerated the risks of inflation while raising risks to economic growth, a situation of stagning and the summary of the economic projections of the Fed (SEP) could reflect that. A wink to stagflation could mean a delay in more rate cuts, which potentially limits Bitcoin’s profits from a QT pause ad.
According to Acheson, the possibilities of a staplation adjustment in the lowest GDP projections and the highest core PCE estimates, with more policy formulators that cite upward risks for inflation) are high.
“If, in fact, we obtain that staplation change in official projections, it is unlikely that the market will be happy. To some extent, they are beginning to have a price, but the confirmation that it is likely that the Fed pushes the even higher rates cuts could scare those who have liquidity injections,” Acheson said.
Recently published regional retail and manufacturing sales rates revealed signs of economic weakness, meanwhile, inflation metrics with future vision have increased, probably adjusting to Trump’s tariffs.
Bank of America expressed it better: “The signal combination of the latest data and policies promulgated to date should result in the growth of the Fed feeding and the improvement of inflation this year, a small wink to stagnation.”
“The plot of the point should still show two cuts in ’25 and ’26,” added the investment bank.
