QT Ends, But Crypto Rally Remains Uncertain, Says Analyst

Ending QT removes a market headwind, but liquidity has not expanded, limiting immediate crypto gains.

Bitcoin only requires rising M2 to maintain strength, while altcoins depend on liquidity and business cycle recovery.

Small catalysts like TGA drawdowns or tariff stimulus may boost altcoins temporarily, but QE is needed for full rally.

VirtualBacon said that the Federal Reserve’s end to quantitative tightening (QT) is a major macro change yet the broader crypto market may not rally immediately. VirtualBacon explained that while QT has stopped, liquidity has not yet expanded and Bitcoin and altcoins respond differently to the current macro environment.

QT Ends, But Liquidity Hasn’t Increased

VirtualBacon noted that ending QT removes a headwind but does not create a tailwind. He noted the Fed’s balance sheet is at $6.5 trillion and money supply (M2) continues to rise due to government debt issuance

He emphasized that Bitcoin does not need QE to gain value; M2 growth alone supports its potential. However, altcoins depend heavily on central bank liquidity and the business cycle

VirtualBacon said weak ISM data and rising unemployment mean altcoins are not gaining traction. He explained that historically, QE cycles required rate cuts first, followed by liquidity injections, before altcoins could outperform Bitcoin.

Bitcoin vs. Altcoins: Different Drivers

VirtualBacon said Bitcoin remains the safest bet because it only needs M2 to increase. He contrasted this with altcoins, which require liquidity surges to see sustained gains. He outlined small catalysts like TGA drawdowns or potential tariff-funded stimulus in mid-2026 that could briefly lift altcoins, but stressed that a full altseason needs QE.

Positioning and Timeline for Crypto Markets

He also provided his investment strategy: 80% Bitcoin holdings with altcoins used for short-term trades, taking profits quickly, and rotating gains back into Bitcoin. VirtualBacon summarized the sequence for altseason as QT ending, TGA drawdown, rate cuts, stimulus, QE, liquidity expansion, and then altcoin growth. He emphasized that understanding this timeline is essential for navigating market fluctuations effectively.

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