Starting tomorrow, the Fed is going to make a big turn in the market. The quantitative tightening plan initiated in 2022 is finally going to hit the pause button. Over the past three years, the Central Bank has forcibly withdrawn nearly $3 trillion from the financial system by letting Treasury and mortgage-backed assets mature without reinvesting. This is also why risk assets have been sluggish in recent years; with less money, who dares to invest recklessly?

But this shift is quite interesting. The Fed is not directly opening the floodgates for quantitative easing, but has changed its approach: the cash from maturing mortgage-backed assets will not be allowed to evaporate; instead, it will be promptly used to purchase government bonds. It sounds like just shifting from one hand to the other? The impact could be significant.

Think about it, the United States is currently facing immense pressure in issuing national debt, and the market needs stable buyers to take over. With the Fed's actions, it essentially injects continuous demand into the U.S. Treasury market, leading to a natural downward trend in yields. As yields decrease, the entire financial environment becomes more relaxed. Large institutions that originally had to grit their teeth to buy U.S. Treasuries can now free up resources to allocate to other assets—stocks, commodities, and of course, cryptocurrencies.

This is referred to in the industry as "soft easing". The liquidity has not disappeared out of thin air; rather, it has been redirected into the treasury bond pool. The tens of billions of dollars that should have naturally shrunk each month will now remain in circulation within the system in the form of reinvestment. In simple terms: the money has not increased, but it is no longer decreasing, and its direction is clearer.

This could be a turning signal for the cryptocurrency market. When macro liquidity stabilizes at a low point, risk appetite often tends to warm up.