What happened?
Fed Chair Jerome Powell said the Fed’s quantitative tightening could wrap up within months while keeping the door open to further rate cuts, and he warned Congress not to remove the Fed’s ability to pay interest on reserves. His comments spooked and excited markets at once — crypto and risk assets rallied while gold hit an all-time high. Powell also noted growing downside risks to employment and warned that a government shutdown could make economic monitoring harder.
Who does this affect?
Investors in crypto, equities, bonds and gold are front and center, since expectations of QT ending and potential rate cuts change asset-price dynamics. Banks and financial institutions are affected because changes to interest on reserves and the Fed’s balance sheet influence liquidity, funding costs and profitability. Ordinary consumers and workers are indirectly exposed too, because weaker labor signals and policy moves can affect borrowing costs, mortgage rates and the broader economy.
Why does this matter?
Market-wise, an end to QT plus odds of rate cuts tends to push yields lower and lift risk assets and gold, so stocks, high-yield bonds, crypto and precious metals could see more inflows and higher prices. But if Congress curbs the Fed’s tools (like paying interest on reserves), the Fed might be forced into rapid asset sales or other emergency moves that would spike volatility and strain markets. For crypto specifically, optimism can fuel rallies, yet key technical levels (e.g., Bitcoin reclaiming $119k) will determine whether the move holds or a sharp correction toward fair-value levels occurs.