US Federal Reserve Chairman Jerome Powell recently said the Fed would soon expand its balance sheet again, effectively preparing for a new phase of quantitative easing.
This news sent crypto investors into a frenzy in anticipation of a new surge in liquidity. At the same time, skeptics warned that it could inflate a dangerous bubble.
Powell hints at quantitative easing
The Federal Reserve recently announced the end of its quantitative tightening program and confirmed plans to halt balance sheet reductions starting December 1st.
“Our long-standing plan is to prevent balance sheet drains when reserves are slightly above the level that we believe is consistent with an adequate reserve requirement,” Powell said at a recent press conference. “There are clear signs in the financial markets that we have reached that standard,” he added.
Although he described this as a “technical adjustment,” such a move would still inject liquidity into the market, which is clearly a form of monetary easing.
This move suggests a subtle shift in policy from focusing on lowering the inflation rate to prioritizing market stability. This psychological tipping point could quickly reignite risk appetite and cause investors to return to speculative assets.
Cryptocurrencies await a surge in liquidity
As the Fed resumes providing liquidity, cryptocurrencies will be one of the first sources of excess capital. The new balance sheet expansion injects cash into the system, lowering funding costs and increasing appetite for riskier assets.
🚨 @RayDalio removed one of the most important macro warnings this cycle. He always goes deep into analysis, which is why I respect his work so much. Here's a short overview of #Bitcoin and what it means.
What is clear:
The Fed is about to end QT and begin QE…
— Thomas Kralow (@TKralow) November 6, 2025
Bitcoin and Ethereum, long seen as barometers of global liquidity, will likely lead the rally, followed by altcoins and memecoins as speculation builds.
The familiar story of the money printing press and the resurgence of inflation hedging will likely resurface. Investors will regain confidence in digital assets as the purest expression of liquidity-driven optimism.
In this environment, a Fed pivot to quantitative easing could spark the most powerful short-term bull market since 2020.
It will also accelerate the risk-on cycle before the underlying economic realities catch up. Recognizing this, the long-term risks are difficult to overlook.
A bubble is emerging
Injecting liquidity into an already overheated economy, characterized by record stock prices, low unemployment and persistent inflation, risks blowing up typical asset bubbles.
https://t.co/BytVjrzXkL
— Ray Dalio (@RayDalio) November 5, 2025
A combination of easy financing, large fiscal deficits and speculative frenzy could push valuations beyond sustainable limits. Among the most vocal critics of this risk is hedge fund manager Ray Dalio.
“The conditions under which quantitative easing will be implemented this time are very different from those in the past, because this time it will be a bubble, not a burst,” Dalio said in a social media post.
If inflation inevitably flares up and the Fed is forced to tighten again, the liquidity reversal could be rapid and severe. This would expose overleverage and cause a sharp decline in stocks, bonds, and cryptocurrencies overall.
What looks like a raging bull market today may, over time, be seen as the last euphoric surge before the cycle reverses.
The post What’s Next for the Crypto Bubble? Signs of Fed Liquidity Boost appeared first on BeInCrypto.
