🐻 BTC Bears Claw Back Despite Powell’s QT Tease 🎭

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Markets

What to know:

  • The venerable Jerome Powell, high priest of the Federal Reserve, has deigned to hint that the balance sheet reduction program may soon be consigned to the dustbin of history. 🧹✨
  • The Fed’s quantitative tightening, a fiscal ballet that began in 2022, has pruned the balance sheet from a corpulent $9 trillion to a mere $6.6 trillion. 🤑💸
  • BTC options market, ever the drama queen, remains stubbornly bearish, as if Powell’s words were but a faint whisper in a hurricane. 🌪️🐻

On a Tuesday that promised little but delivered even less, Federal Reserve Chairman Jerome Powell-that paragon of monetary virtue-declared that the central bank might soon halt its balance sheet reduction program. Yet, BTC, that fickle minx, continues to languish in the red, with derivatives markets wearing their bearish hearts on their sleeves. 💔📉

“Our long-stated plan,” Powell intoned, with all the gravitas of a man reading the telephone directory, “is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions.” One can only imagine the riveted audience at the National Association for Business Economics conference in Philadelphia, hanging on his every word. 📜🎭

“We may approach that point in coming months,” he added, with the air of a man who has just discovered fire. “We are closely monitoring a wide range of indicators to inform this decision.” One wonders if a crystal ball is among those indicators. 🔮🤔

The so-called quantitative tightening (QT), a fiscal austerity measure that began in 2022, was designed to mop up the extraordinary liquidity the Fed had sloshed about during the coronavirus crisis. Since then, the Fed’s balance sheet has shrunk from a bloated $9 trillion to a more svelte $6.6 trillion. But let us not applaud too loudly; the Fed is not dieting for a beach holiday. 🏖️💼

Powell’s remarks suggest that the Fed does not wish to shrink its balance sheet to the point where bank reserves-those sacred funds banks hold at the Federal Reserve-dip below the level deemed “ample.” Staying above this threshold is, apparently, crucial to avoid disruptions in short-term funding markets and ensure financial stability. One can only marvel at such foresight. 🏦🔒

According to the chairman, this point may be nearing as the central bank scrutinizes market conditions, including recent increases in various overnight funding rates. One imagines them poring over charts with the intensity of a detective solving a murder mystery. 🕵️‍♂️📈

These comments arrive as markets anticipate two 25-basis-point Fed rate cuts by year-end, following a similar reduction in September, and have stoked bullish sentiment on crypto social media. Yet, BTC remains unmoved, like a sphinx staring into the void. 🦧🗿

BTC Not Impressed

BTC, that incorrigible cynic, is not impressed, nor is the broader crypto market. At the time of writing, the leading cryptocurrency by market value traded near $112,600, as flat as a pancake on a 24-hour basis. 🥞📉

Deribit-listed options tied to BTC showed one-week puts, offering downside protection, continuing to trade at a premium to calls or bullish bets. Options out to the March 2026 expiry displayed a similar bearish pricing. It seems the market is not holding its breath for a crypto renaissance. 🕳️🐻

Perhaps this is the market’s way of reminding the crypto bulls that the end of quantitative tightening does not necessarily herald a new era of balance sheet expansion, like the one during COVID that lubricated the crypto bull market. Greed, it seems, has a short memory. 💰🦬

Moreover, the pace of QT slowed notably from mid-2024. Since April, the central bank has limited monthly redemptions of Treasuries to $5 billion, while maintaining the cap for mortgage-backed securities at $35 billion. So, the approaching end of QT does not signal a significant bullish or dovish surprise. It is, in short, a damp squib. 🎆💤

“The big takeaway from Powell’s talk today,” observed the pseudonymous sage Markets and Mayhem on X, “was that the QT program is likely to end soon. That is to say, the Fed is likely to stop shrinking its balance sheet in the coming months. The run rate on this balance sheet reduction was already very small, so it’s not a huge change.” One can almost hear the collective yawn. 😴📰

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2025-10-15 12:15