After waiting for more than three years, is the Fed's "tapering" operation finally coming to an end?

On December 1st, Beijing time, which is today, the Fed officially announced the end of quantitative tightening (QT). In plain language: the valve that has been madly pulling money out of the market is closed.

Let's review the background first -
Since starting QT in June 2022, the Fed's balance sheet has shrunk by more than $2 trillion, directly dropping to around $6.55 trillion. Where did this $2 trillion go? It has been pulled out of the financial system, extracting liquidity. The market has been in a "blood shortage" state for more than two years, and the prices of various assets have been tightly stretched as well.

What does stopping QT mean?

First of all, it is important to clarify that stopping the pumping does not mean immediately releasing the water. However, at least, the most severe wave of contraction has indeed ended. The liquidity pressure will gradually ease, which is certainly not a bad thing for risk assets.

How will the crypto market perform? This is a key question. If global liquidity really reaches an inflection point, will funds flow back into high volatility assets? Historical data shows that easing cycles are often more favorable for cryptocurrencies.

But don't be too happy too soon. Stopping QT is just the first step; the real turning signal will depend on the subsequent pace of interest rate cuts and market reactions. Nevertheless, the fact that the three-year tightening cycle has come to an end is itself a point worth paying attention to.

How much do you think this policy shift will affect market sentiment?