Market Trend & Prediction - Bitcoin price increased significantly from $16,000 to $126,000 during the period when the Federal Reserve (Fed) was reducing its balance sheet for 3 years [1] - The market anticipates potential changes and uncertainties now that the Fed is expanding its balance sheet to increase bank reserves [1] Monetary Policy - The Fed announced it would purchase $40 billion of Treasury Bills within the next 30 days [1] - The market expresses surprise at the Fed's decision to start buying Treasury Bills sooner than expected (before 2026) [1]

Core Viewpoint - The Federal Reserve plans to expand its balance sheet by purchasing short-term Treasury securities to alleviate pressure in overnight lending markets, which are essential for the overall financial system [1] Group 1 - The Federal Reserve is ready to buy short-term Treasury securities [1] - The aim of this action is to prevent pressure in overnight lending markets [1] - Overnight lending markets are critical to the broader financial system [1]

Liquidity & Monetary Policy - The US government reopening is expected to lead to increased liquidity due to TGA spending over several months [1] - Quantitative Tightening (QT) is expected to end in December, leading to a gradual increase in the balance sheet [1] - The market anticipates the dollar to weaken [1] - Expect "temporary" measures like Term Funding and SRF operations to avoid a year-end funding squeeze [1] - Changes to the Supplementary Leverage Ratio (SLR) are anticipated in Q1 to allow banks to absorb more issuance and re-lever their balance sheets, acting as a significant liquidity boost [2] - Lower rates are expected as banks buy more bonds due to SLR changes [2] Fiscal Policy & Global Economy - Expect stimulus payments and fiscal stimulus to boost the economy [2] - China is expected to continue balance sheet expansion, and Europe may implement fiscal stimulus or extra spending [2] - The government aims to stimulate the economy leading up to the Mid-Terms [3] Regulatory & Legislative - Finalization of the CLARITY Act for crypto is expected [2]

Federal Reserve Chairman Jerome Powell on Tuesday said that the central bank could soon reach a point where its long-running program to reduce the balance sheet size would need to end. Yet, BTC continues to trade in the red with derivatives pointing to persistent bearish sentiment. “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” Powell said in prepared remarks for his speech at the National Association for ...