{"id":91272,"date":"2025-11-21T16:02:18","date_gmt":"2025-11-21T13:02:18","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=91272"},"modified":"2025-11-21T16:05:48","modified_gmt":"2025-11-21T13:05:48","slug":"report-fed-halts-qt-due-to-liquidity-shortage","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/report-fed-halts-qt-due-to-liquidity-shortage\/","title":{"rendered":"Report: Fed Halts QT Due to Liquidity Shortage"},"content":{"rendered":"

In October, the Fed<\/span> reduced<\/a> the key interest rate by 25 basis points and announced the cessation of the quantitative tightening (QT<\/a>) program from December 1. However, the “victory over inflation” was actually a forced reversal due to mounting issues in the financial system, according to Binance Research<\/a>.<\/p>\n

Analysts pointed out that the catalyst for the decision was the U.S. government shutdown<\/a>, which resulted in the Treasury General Account (TGA) balance exceeding $1 trillion. This effectively withdrew about $700 billion in liquidity from the banking system, comparable to the effect of several rate hikes.<\/p>\n

Signs of systemic stress were evident in the sharp rise in the spread between SOFR<\/span> and IORB<\/span> rates, as well as the record use of the Standing Repo Facility (SRF) \u2014 an emergency funding tool.<\/p>\n

\"SOFR-IORB
SOFR and IORB spread dynamics. Source: Binance Research.<\/figcaption><\/figure>\n

On October 31, the volume of SRF requests reached a historic high of $50.35 billion, indicating a shortage of private funding.<\/p>\n

\"Record
SRF usage dynamics for emergency funding. Source: Binance Research.<\/figcaption><\/figure>\n

Researchers also noted structural issues in the economy. Despite the relative stability of the unemployment rate (3.8%), the private sector is losing jobs, with growth driven by public sector hiring.<\/p>\n

Household debt reached a record $18.7 trillion in the second quarter of 2025, with consumer loan delinquencies rising to multi-year highs.<\/p>\n

The “Slingshot Effect” and Bitcoin’s Role<\/h2>\n

For the cryptocurrency market, the end of QT removes a major macroeconomic obstacle of the past two years. Experts anticipate that spending from the TGA after the shutdown will create a “slingshot effect,” injecting liquidity into the markets.<\/p>\n

By the first quarter of 2026, analysts predict the Fed will shift to a “QE-Lite” policy \u2014 purchasing short-term Treasury bills to replenish bank reserves. This, along with the strengthening narrative of Bitcoin as an “antifragile” asset amid the vulnerability of TradFi<\/span>, could drive a new wave of cryptocurrency growth.<\/p>\n

Researchers identified key risks as the potential for stagflation<\/span> or a “hard landing” for the economy. They assessed the current macro situation as a “shift from headwind to tailwind” for risk assets like digital gold.<\/p>\n

Earlier, analysts at XWIN Research outlined risks<\/a> of Bitcoin falling to $60,000 due to the Fed’s “hawkish” decisions.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Fed’s “victory” over inflation was actually a forced reversal due to mounting issues in the financial system, according to Binance Research.<\/p>\n","protected":false},"author":1,"featured_media":91273,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"Fed's reversal due to financial issues, not inflation victory, says Binance Research.","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1249,1001],"class_list":["post-91272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-federal-reserve-system","tag-liquidity"],"aioseo_notices":[],"amp_enabled":true,"views":"244","promo_type":"1","layout_type":"1","short_excerpt":"Fed's reversal due to financial issues, not inflation victory, says Binance Research.","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/91272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=91272"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/91272\/revisions"}],"predecessor-version":[{"id":91274,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/91272\/revisions\/91274"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/91273"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=91272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=91272"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=91272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}