#ETH走势分析 The Fed's operation in this instance is not understood by many in the market.

Officially stop the tapering from December 1st - to put it simply, the "draining game" that has lasted for two and a half years since June 2022 is coming to an end. They have reduced the balance sheet from nearly $9 trillion all the way down to $6.6 trillion, and now suddenly say they are done playing.

This matter seems strange.

# Why now?

**The first reason**, the economic data from the United States is starting to falter. The job market is weak, economic growth is slowing down, and if liquidity continues to tighten, the market may truly be unable to withstand it. This time, the Fed is hitting the brakes early, fearing not uncontrollable inflation, but a hard landing of the economy dragging everyone down.

**The second reason** is more direct – money is running out quickly. Bank reserves are decreasing, and the money market has already started to flash warning signs. If this continues, a liquidity crisis will be imminent, and it will be too late to attempt a rescue.

But there is a deeper logic to this.

# The Bundling Game of the Fed and the Treasury

During the pandemic years, the Fed madly bought U.S. Treasuries to provide fiscal support, accounting for more than half of the deficit. Now, if they continue to shrink the balance sheet? It would mean forcing the U.S. government to face "soaring borrowing costs and doubled financing difficulties." To put it bluntly, the Fed can no longer make decisions independently; they have to consider the Treasury Department's survival.

The problem is that inflation is still hanging at a high level of 2.8% to 3.0%, and economic data is starting to weaken. The Fed is now walking a tightrope: should it prioritize the economy or control inflation? Neither side is satisfied.

# What does it mean for the market?

**In the short term**, it's a positive message. Global liquidity pressure can ease a bit, and the funding situation won't be so tight, so various assets at least won't experience indiscriminate plummeting.

**But don't be too optimistic**. In recent years, the Fed's assets have actually expanded by more than $2 trillion. Once this hot money finds an outlet, it may once again impact the stock market, commodities, and cryptocurrencies. The volatility will only increase.

There is another detail worth pondering: the economic data for October in the U.S. has been postponed to December due to the government shutdown. The vacuum period of data combined with the policy transition period has completely disrupted market expectations. No wonder recent U.S. stocks have been like a roller coaster, and cryptocurrencies like ETH have also been fluctuating wildly.

# Summary in One Sentence

The Fed stopping the balance sheet reduction does not represent victory, but rather a signal—that the economy may be worse than it appears on the surface, and liquidity is quickly reaching its limits. The wave of interest rate cuts from 2025 to 2026 is likely to come more fiercely and quickly than the market expects.

Are you ready to take the challenge?