Bitcoin pauses at $90,000... Attention on Fed's 'stealth QE' signals

Source: BlockMedia Original Title: [New York Coin Market/Close] Bitcoin ‘catching its breath’ at $90,000… Focus on Fed’s ‘stealth QE’ signal Original Link: With growing expectations that the US Federal Reserve (Fed) could shift to a liquidity supply stance by resuming Treasury purchases ahead of the December Federal Open Market Committee (FOMC), the New York digital asset market maintained a wait-and-see approach amid limited corrections. The market’s attention is focused on signals of Treasury purchases, which could be interpreted as ‘stealth QE,’ rather than an outright rate cut.

According to CoinMarketCap on the 8th (local time), the total digital asset market capitalization increased by 2.03% from the previous day to $3.11 trillion. Bitcoin (BTC) fell 0.77%, fluctuating around $90,700, with its market cap dominance slipping slightly to 58.7%. Ethereum (ETH) dropped 0.29%, but on a weekly basis rose 13.62%, continuing a relatively strong trend.

Layer 1 category strong… Cardano and Bitcoin Cash stand out

Among the top altcoins by market cap, performances were mixed. Cardano (ADA) rose 0.78% and surged 15.08% on a weekly basis, marking the highest return. Bitcoin Cash (BCH) climbed 12.84% weekly, and Solana (SOL) rose 7.56%, continuing their strength. On the other hand, Tron (TRX) fell 1.57%, and Hyperliquid (HYPE) dropped 1.23%.

Dogecoin (DOGE) rose 0.7%, while Binance Coin (BNB) declined 0.79%. By sector, Layer 1 projects led the market, while meme coins and exchange-related tokens generally showed mixed trends.

Fed liquidity policy under scrutiny… “QT may be over, liquidity resupply could begin”

The market is focusing more on liquidity supply signals than the rate cut itself. According to CME FedWatch, the probability of a 0.25 percentage point rate cut is at 87.2% and already priced in. What’s drawing attention instead is the possibility of the Fed purchasing short-term Treasuries (T-bills) under the pretext of ‘reserve management.’

Mark Cabana, strategist at Bank of America, said, “Chair Powell may announce $4.5 billion per month in short-term Treasury purchases,” and analyzed, “Although this appears to be technical liquidity adjustment, it could actually signal the end of quantitative tightening (QT) and the start of liquidity resupply.” He added, “It’s nominally a technical measure, but in reality, it’s stealth QE.”

James Sohn, market strategist at Wellington Altus, also stated, “This FOMC may not be just a rate cut meeting, but a time to refill the liquidity system,” and predicted, “QT is effectively in its final stage, and the Fed may begin normalizing liquidity as early as this week.”

However, on-chain indicators show a cautious mood. According to Glassnode, although Bitcoin recently rebounded to $94,000, both cumulative volume delta (CVD) based on spot trading and open interest declined. This suggests that the market is maintaining a cautious stance rather than confidence in the upward trend. In the options market, the delta skew indicator, which measures hedging against downside risk, is rising, and ETF fund flows recorded net outflows, indicating that risk appetite has not fully recovered.

Despite rising dollar and Treasury yields, wait-and-see sentiment remains… Sentiment in ‘fear’ phase

Macro indicators also revealed some factors weighing on the risk asset market. The dollar index (DXY) rebounded 0.11% from the previous day to 99.09. The US 10-year Treasury yield also rose 0.65% to 4.166%. Typically, a stronger dollar and rising yields exert short-term downward pressure on risk assets, including Bitcoin.

Market experts say that if the Fed packages short-term Treasury purchases as ‘liquidity management’ in this FOMC, it could be regarded as the start of an actual liquidity supply phase and may become a key turning point in determining the liquidity environment for digital assets in the first half of the year.

Meanwhile, Alternative’s Fear & Greed Index, which gauges investor sentiment, remained at 22, indicating a state of ‘fear.’