This week’s Fed meeting—don’t just focus on interest rates. The real show is the balance sheet—that $6.5 trillion figure is the real lifeblood of the crypto market.

Let’s look at some key numbers: the Fed’s balance sheet is now at $6.6 trillion, down from a peak of $9 trillion—a $2.4 trillion reduction. Sounds aggressive? But here’s the problem—the overnight funding market is already starting to feel the pinch, and market liquidity is clearly tightening. What’s even more critical is that $6.5 trillion in Treasury securities are about to mature and need to be dealt with. If this move isn’t handled well, liquidity could fall off a cliff.

Bitcoin and other crypto assets, at the end of the day, live and die by liquidity. More money means prices rise; less money means they fall—it’s that simple.

So what should retail investors do? Don’t try to guess price movements. Just watch for one signal—the liquidity turning point. If the Fed can’t take the pressure and starts pumping money again, odds are the crypto market will rally. But if they keep shrinking the balance sheet, be ready for a wild ride in the short term.

The market always rewards those who stay calm when others panic and stay rational when others go crazy. In a policy-driven market, following the money is much more reliable than following your gut. Focus on liquidity as the main thread, and at least you won’t trip up at critical moments.