Fed’s QT to End Soon, But Powell Warns Congress Threatens Rate Control Stability – Crypto at Risk?

Federal Reserve (FED) Chair Jerome Powell spoke on Tuesday that the central bank’s three-year campaign to shrink its $6.6 trillion balance sheet could end within months, while keeping the door open for further interest rate ￰0￱ at the National Association for Business Economics conference in Philadelphia, Powell warned Congress against eliminating the Fed’s ability to pay interest on bank reserves, stating such action would cause the central bank to “ lose control over rates .” The announcement sent ripples through crypto ￰1￱ Hayes tweeted , “ QT is ￰2￱ up the f**king truck and buy everything ,” while Joe Consorti noted Bitcoin rose from $18,000 to $126,000 during ￰3￱ hit a record high near $4,200, up 59% year-to-date, driven by rate cut ￰4￱ acknowledged “ downside risks to employment have risen ” and suggested another quarter-point cut at the October 28-29 meeting remains ￰5￱ Fed has been passively reducing its balance sheet since mid-2022, when its holdings peaked at nearly $9 trillion following pandemic-era ￰6￱ balance sheet trends |) October 14, 2025 In September, ￰7￱ had already projected two additional rate cuts for 2025 and one for ￰8￱ ￰9￱ Michael Feroli noted “ a major shift in labor market momentum would be needed to prevent another cut in October .” The firm outlined scenarios for Fed easing ￰10￱ non-recessionary environments, the S&P 500 and high-yield bonds typically lead ￰11￱ recessionary scenarios, Treasuries and gold outperform.

Gold’s rally to $4,185 is driven by geopolitical uncertainties, central bank buying, and ETF ￰12￱ analyst Matt Simpson noted the rally “ has also become a momentum trade, where traders pile in simply to chase prices getting away from them .” Bitcoin Faces Correction Risk Despite QT Optimism Bitcoin trades at $115,321, positioned between the MVRV Mean band at $96,526 and the +0.5σ resistance at $119,018. The MVRV framework compares Bitcoin’s market cap to its realized cap, providing valuation insight relative to holder cost ￰13￱ positioning indicates that Bitcoin is approximately 19.4% above fair value, having retreated from extreme overvaluation near $141,510.

According to Analyst Ali Martinez, Bitcoin must reclaim $119,000 to maintain its bullish momentum; a failure would indicate a potential correction toward the $96,500 Mean ￰14￱ it stands now, Bitcoin faces an unfavorable risk-reward scenario, with a 16.3% downside potential to its $96,500 fair value, versus limited upside, while trading below the $119,000 resistance ￰15￱ to reclaim the +0.5 band suggests consolidation between $110,000 and $120,000 before a probable correction toward the MVRV ￰16￱ $119,000 level is a critical test to determine whether bull momentum continues or a correction toward $96,500-$100,000 materializes.