The Fed’s dovish stance could boost crypto markets in the fourth quarter

The US Federal Reserve could boost crypto markets in the coming months due to monetary policy easing.

Fed Chairman Jerome Powell’s comments on Tuesday have reignited confidence in the crypto markets as the likelihood of rate cuts increases.

In one speech On the central bank’s balance sheet, Powell openly acknowledged rising “downside risks to unemployment” in a softened signal that the central bank is preparing to ease monetary policy.

“Increasing downside risks to employment have changed our assessment of the balance of risks,” he said, before adding: “We felt it appropriate to take another step towards a more neutral policy position at our meeting in September.”

“There is no risk-free policy if we have to overcome the tension between our employment goals and inflation.”

There you have it, QT is over. Back up the damn truck and buy everything. pic.twitter.com/kQbpBSOlOU

— Arthur Hayes (@CryptoHayes) October 14, 2025

End of QT is good for BTC

Powell indicated that the Fed could be nearing the point in the coming months of halting balance sheet drains. This suggests that the quantitative tightening phase is nearing an end, paving the way for more rate cuts.

The odds of a 0.25% rate cut at the Fed’s Oct. 29 meeting currently stand at 95.7%. according to to the CME futures markets. However, the probability of a similar cut in December has risen to 94.8%, suggesting interest rates are likely to be cut by 0.5% by the end of the year.

“While there was little doubt that the FOMC wanted to cut rates at its next meeting, today’s comments were strong confirmation of that expectation,” said Michael Feroli, JPMorgan’s chief economist.

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“We have a fully dovish Fed, with 125 basis points rate cuts already priced in, ready to end the QT interval.” said Bitcoin entrepreneur Joe Consorti before adding:

“BTC has been effectively range-bound since May. You know what happens next. Don’t think about it too much.”

In a separate message, he said that with quantitative tightening coming to an end and Fed policy rates falling below 3%, “BTC now has the tailwind of easing at its back.”

QT is when a central bank reduces the size of its balance sheet by allowing bonds and securities it owns to mature without replacing them. It is the opposite of quantitative easing (QE), where the Fed buys securities to inject money and liquidity into the economy.

Bitcoin has risen 750% in the last three years (wow) as the Fed has tightened monetary conditions.

Fed funds: 0.25% → 5.5% → 4.25%
Balance sheet: $9 billion → $6.5 billion

With the QT coming to an end and Fed policy rates falling below 3%, BTC now has the tailwinds of easing. https://t.co/4u7rKhSuQA pic.twitter.com/NbhLHz6A65

— Joe Consorti ⚡️ (@JoeConsorti) October 14, 2025

No market response yet

Crypto markets are still jittery and reeling from the industry’s largest liquidation event this weekend, so the reaction was muted.

Total capitalization fell below $4 trillion, while Bitcoin fell below $110,500 again on Tuesday, in a pattern typical of Asia and America. It had recovered to trade at $112,500 in Wednesday morning’s Asian session.

Ether prices lost the psychological level of $4,000 yesterday, but had recovered to $4,120 at the time of writing. The altcoins were still bleeding for the most part, despite a small recovery for some.