Is the Fed about to unleash massive liquidity? Rate cuts + trillions in money printing, a double whammy!

Lately, the entire financial world has been focused on one thing: the Fed is really about to make a major pivot. Not just minor tweaks, but a combo of rate cuts paired with trillion-dollar bond purchases. If this move comes to pass, the entire market’s playbook may need to be rewritten.

First, let’s talk about the rate cuts—there’s basically no suspense left. The probability of a 25 basis point cut in December has soared to 89.2%, so it’s almost a done deal. What’s even more aggressive is that the market expects at least one cut by January next year is nearly certain, with a 25% chance of two consecutive cuts, slashing rates by 50 basis points total.

Why so certain? Because the Fed has already started dropping heavy hints internally. Several senior officials have recently been talking about the weakening job market—basically laying the groundwork for a rate cut. Add to that the rumor that Trump might nominate the dovish Kevin Hassett as the next Fed chair, and the pace of rate cuts could be even faster than people expect.

But rate cuts are just the appetizer. The real main event is the potential restart of the bond-buying program in 2026—in plain terms, money printing.

This isn't something the Fed wants to do; they're being forced into it. Right now, the banking system’s reserve shortfall is somewhere between $200 and $300 billion, already hitting the safety red line. The Treasury’s liquidity support isn’t nearly enough, so in the end, the Fed will have to step in and “add water” themselves.

There’s already a rough timeline: this December, they might first announce a “technical pause” on quantitative tightening to stabilize market sentiment, then officially start buying Treasuries in Q1 next year, with an initial estimate of $50 to $100 billion per month. Of course, the Fed isn’t completely unified on this. The Cleveland Fed president has publicly thrown cold water on the idea, warning that excessive easing could plant the seeds of financial risk. Powell himself is still hesitating about acting in December, showing there’s some serious internal debate.

But the market isn’t waiting for an official announcement. The three major US stock indices have all been rising lately, gold has soared on easing expectations, the dollar has weakened, and long-term bond yields are dropping. The whole vibe feels like the “liquidity floodgates” are already opening.

What does this mean for the crypto market? Excess liquidity is typically rocket fuel for risk assets. If the Fed really follows this playbook, there’ll be even more money in the market, with greater pressure for funds to find a home. History tells us that after every major liquidity injection, crypto often reaps significant benefits. Of course, that’s assuming there are no macro shocks and regulations don’t suddenly tighten.

In short, the curtain has already risen on this policy pivot. In the coming months, watching every move the Fed makes may be even more important than watching the charts.