Bitcoin News Today: Bitcoin's Bearish Spell Continues as Fed's QT Halt Fails to Spark Liquidity-Driven Rally

Federal Reserve Chair Jerome Powell's recent remarks suggesting the central bank may soon halt its quantitative tightening (QT) program have failed to spark optimism in Bitcoin markets. Despite the Fed's balance sheet shrinking from $9 trillion to $6.6 trillion since 2022[1], Bitcoin (BTC) remains mired in a trading range near $112,600, with derivatives data and technical indicators painting a persistently bearish picture[4].

Powell indicated in a speech that the Fed aims to stop QT when bank reserves align with "ample reserve conditions," a threshold it may approach in coming months[1]. The program, designed to remove liquidity added during the pandemic, has slowed significantly, with monthly Treasury security redemptions capped at $5 billion since April 2025[5]. However, analysts argue that the end of QT does not necessarily signal a policy shift toward easing. "The run rate on balance sheet reduction was already very small, so it's not a huge change," noted pseudonymous observer Markets and Mayhem on X[1].

Meanwhile, Bitcoin options markets reflect deep caution. Deribit data shows one-week puts trading at a premium to calls, with bearish positioning extending to March 2026 expiries[1]. This defensive tilt contrasts with the Fed's dovish signals, as traders hedge against potential volatility. The disconnect underscores skepticism that QT's end will translate into a new liquidity-driven bull market akin to the 2020-2021 era[2].

Technical indicators reinforce the bearish sentiment. A bearish divergence in Bitcoin's weekly MACD-where prices hit fresh highs while momentum waned-has raised alarms among traders[3]. On the daily chart, BTC has broken below a five-month uptrend and the 100-day moving average, with no immediate support levels to cushion a potential drop toward $101,000[3]. "This isn't a market screaming 'buy the dip'; it's a market warning you to step back," said pseudonymous analyst Markets and Mayhem[3].

Regional dynamics further complicate the outlook. U.S. institutional demand, as reflected in Coinbase Prime outflows and spot ETF inflows, has driven recent rallies[7]. However, Asian retail activity-traditionally a catalyst for Bitcoin's momentum-remains subdued. The Korea Premium Index, which measures price discrepancies on Korean exchanges, has turned negative, signaling weak local demand[9]. This divergence highlights a fragile global consensus, with U.S. buyers propping up prices while Asian traders remain cautious[8].

The Fed's balance sheet policy also faces scrutiny. A Cleveland Fed report estimates that reserves must remain above 8-10% of GDP to avoid returning to pre-crisis liquidity constraints[6]. With reserves currently at around 21.6% of GDP, the Fed's buffer is ample, but any miscalculation could reignite volatility in short-term funding markets[6].

For Bitcoin, the path forward hinges on a fragile equilibrium. A rebound above $114,000 could reignite bullish momentum, but a breakdown below $104,000 risks a deeper correction toward $93,000[7]. Meanwhile, the Fed's next moves-whether to ease further or maintain hawkish neutrality-will remain pivotal. As one analyst put it, "The party might be over, at least for now"[3].