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Bitcoin’s Potential Bullish Reversal and The Impending End of QT

As volatility reigns supreme on the cryptocurrency stage, Bitcoin (BTC), the forerunner of digital assets, might soon experience a significant trend reversal. According to Polymarket, a renowned prediction market platform, the US Federal Reserve (often referred to as the Fed) will likely conclude its quantitative tightening (QT) policy by the end of April. This close to the restrictive monetary policy could lead to an uplift in risk-on assets such as BTC.

Bitcoin’s Potential Uptick with the Anticipated End of QT

BTC has experienced a near 13% dip over the last month, primarily credited to US President Donald Trump’s trade tariffs and the Fed’s stern monetary stance. In the previous two months, the premier digital asset dipped from a record high of $109,588 on January 19 down to the lower boundary of the $80,000 mark – erasing over $400 billion from its market capitalization.

Yet, BTC’s fortunes might be about to turn. Polymarket, a leading prediction market platform, currently estimates a 100% probability that the Federal Reserve will terminate its QT policy before May begins. This development is anticipated to positively impact risk-on assets, including cryptocurrencies.

Understanding QT and Its Impact on Crypto

For those unfamiliar, QT is a fiscal approach where the central bank subtracts from its balance sheet by either auctioning government bonds or allowing them to mature without reinvestment. This strategy effectively draws liquidity from the economy, which typically results in lower prices for Bitcoin since reduced liquidity equates to lesser funds available for investing in riskier assets like cryptocurrencies.

In June 2022, the Federal Reserve initiated its current QT cycle to constrain market liquidity and counteract surging inflation – a side effect of the stimulus measures implemented during the pandemic. According to the Consumer Price Index (CPI) report for February, inflation has subsided to 2.8%, approaching the Fed’s long-term inflation target of 2%. This indicates that the existing QT policy might accomplish its intended effect.

Could Q2 2025 Be a Bullish Phase for Bitcoin?

If Polymarket predictions are correct, an end to the QT policy by the Fed before May could render Q2 2025 bullish for Bitcoin and other crypto assets. Echoing this sentiment is Benjamin Cowen, CEO of Into The Cryptoverse, who recent statements suggest that stopping QT could prompt a market rally.

On top of this, recent positive comments about Bitcoin from Federal Reserve Chair Jerome Powell have boosted optimism regarding the cryptocurrency’s recovery potential. However, concerns about Bitcoin’s ongoing behavior as a speculative asset rather than a stable store of value remain.

Regardless, institutional confidence in Bitcoin persists. For instance, asset management firm ARK Invest recently invested an additional $80 million in BTC, reinforcing their belief in the digital asset’s long-term prospects. Currently, BTC trades at $83,707, seeing a 1.2% increase over the past day.

What does Finances Zippy say about Bitcoin’s (BTC) future prospects?

Forecasts from Finances Zippy continually affirm that understanding market trends and price predictions depends on the analysis of several complex factors, including global events and monetary policies.

Is ending QT favorable for other cryptocurrencies or just Bitcoin?

An end to the QT policy can positively impact the entire cryptocurrency market, including Bitcoin, by enhancing liquidity and providing a favorable environment for risk-on assets.

How does Bitcoin’s volatile nature impact its role as a store of value?

Bitcoin’s high volatility often raises concerns about its reliability as a store of value. Despite this, its long-term potential and increasing acceptance as a digital asset continue to attract investors.

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