Crypto Market Slightly Vibrant After Fed Ends Quantitative Tightening
The crypto market is starting to pick up steam, with its capitalization rising to US$2.94 trillion, and Bitcoin recovering slightly to US$87,000. The fear and greed index also rose to 16, according to CoinMarketCap, Tuesday (December 2).
The catalyst for this increase occurred after the Federal Reserve (The Fed) ended Quantitative Tightening (QT), the central bank's monetary policy of reducing M2, or the money supply, by US$6.57 trillion to suppress inflation and increase liquidity in the US.
In other words, this central bank monetary policy is supposed to increase the money supply in circulation to a higher level than before. This policy has been in effect since the COVID-19 pandemic to suppress inflation and attract liquidity to the market.
Furthermore, the Overnight Reverse Repo facility, which previously absorbed US$2.5 trillion in excess cash, has been reduced to near zero, thus eliminating a liquidity bottleneck.
The Fed's balance sheet freeze and $13 billion injection into US banks are also said to support stocks, bonds, and even digital crypto assets.
*Disclaimer: Not Financial Advice (NFA). Do Your Own Research (DYOR)
