On December 1st, the Fed's quantitative tightening (QT) officially came to an end. This may seem trivial, but its impact is far-reaching.

Let’s talk about the background first. Starting in June 2022, the Fed initiated QT, withdrawing $2.4 trillion in liquidity from the market over three years. Once this money disappeared, the stock market, the cryptocurrency sphere, and emerging markets were all affected — the pool of funds became shallower, and prices naturally came under pressure.

Is QT stopping a good thing? Theoretically, yes, but the reality is more complicated. Bank reserves are approaching the warning line, and the usage of the Fed's emergency repurchase tool has surged, indicating that the funding squeeze cannot be alleviated in just a day or two. Although approximately $40 billion in short-term Treasury bills are being purchased monthly, the liquidity issues in the Treasury market and the mortgage-backed securities market remain challenging.

What does this mean for ordinary investors? The end of QT is a turning point signal, but don’t expect the market to surge immediately. Imagine running a long race and the headwind suddenly stops; you won’t accelerate instantly, but at least it won't be as strenuous. Historical data shows that liquidity turning points often lead price turning points by several months—waiting for prices to rise before entering the market might be too late.

Cryptocurrencies and tech stocks, which are high-risk assets, are most sensitive to liquidity. After the cessation of QT, the underlying logic has changed, and the next year or two may be a window for positioning. Of course, this is not a call to action, but a reminder: the key points in the market cycle have arrived, and it is worth paying more attention.