Fed To Halt QT While Hassett Leads Race For Chair Amid Cut Forecasts

TLDR

Table of Contents

Fed to end QT on Dec 1, shifting to short-term Treasury reinvestments.
Kevin Hassett, open to Fed Chair role, leads with 55% odds.
The market shows an 87% probability of exactly three rate cuts in 2025.
Bitcoin surged 7.6x after QE began post-QT in 2019.

The Federal Reserve is set to end quantitative tightening (QT) on December 1, 2025, prompting fresh speculation about the next phase of monetary policy. With Bitcoin traders recalling the 2019 cycle where QT’s end was followed by a sharp decline before a historic rally, attention is now turning to liquidity shifts and leadership changes at the Fed. Markets are also focused on Kevin Hassett, who has publicly accepted the possibility of becoming the next Federal Reserve chair. Current expectations show an 87% chance of three rate cuts in 2025, reinforcing a rising growth-focused narrative.

Fed Ends QT as Liquidity Conditions Tighten

The Federal Reserve will end its quantitative tightening (QT) policy on December 1, 2025, and shift to reinvesting in short-term Treasuries. This marks the second time the central bank has ended QT, the first being in late 2019 when the balance sheet stopped shrinking near $3.8 trillion.

While some investors interpret this shift as a move toward easier financial conditions, historical data shows that the mere end of QT did not trigger a Bitcoin rally. In 2019, Bitcoin fell by nearly 35% shortly after QT ended. It only surged after the Fed reintroduced quantitative easing (QE), which injected $3.2 trillion over 18 months. That led to a 7.6x rise in Bitcoin’s price from $3,800 to $29,000.

Bitcoin Sentiment Tracks Liquidity, Not Just QT Signals

Today’s market environment is different in several ways. Bitcoin has broader institutional exposure through spot ETFs, corporate treasury holdings, and long-term holders. These factors may help reduce sharp volatility even if there is an initial dip similar to 2019.

Still, market participants are watching closely to see if the end of QT will soon be followed by full-scale QE or other liquidity injections. “Bitcoin doesn’t respond just to QT ending—it moves when liquidity floods,” said one analyst familiar with historical cycles.

Kalshi data and crypto derivatives markets now show a growing concentration around an easing policy scenario, with Bitcoin’s price already reflecting rising optimism.

Kevin Hassett Emerges as Frontrunner for Fed Chair Role

Kevin Hassett, a former economic advisor to the Trump administration, has publicly confirmed his willingness to take on the role of Federal Reserve Chair. In a recent interview, Hassett stated he would be “happy to serve,” making him the most clearly positioned candidate for the role.

Prediction markets now show Hassett leading with 55% odds to replace Jerome Powell. Christopher Waller follows with 22%, while Kevin Warsh holds 12%. Hassett is known for favoring growth-oriented policy and faster rate cuts, which aligns with market sentiment heading into the 2025 election year.

Markets Price in 87% Odds of Three Rate Cuts in 2025

According to Kalshi, traders now see an 87% chance of exactly three rate cuts in 2025. This is the highest level of consensus on rate cuts so far. Investors are now less focused on uncertain policy paths and more aligned with a scenario of easing.

Hassett’s support for faster rate reductions has strengthened the view that a dovish Fed may return. As liquidity expectations rise, so does interest in assets sensitive to monetary easing, including Bitcoin and tech stocks.

The Fed’s QT end and potential leadership change are becoming central themes for traders in both traditional and crypto markets.