The Bitcoin Layer THE FED ENDS QT: Fiscal Dominance, Repo Stress, & Bitcoin’s Signal
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Oct 29, 2025 Discover the implications of the Fed's recent rate cut and the end of quantitative tightening. Explore the concept of Balance Sheet Dominance and how Treasury bill issuance is affecting the repo market. Delve into the idea of fiscal dominance dictating Fed policy, and why major banks may not be lending reserves. The connection between fiscal-driven inflation and Bitcoin's positioning in a shifting monetary landscape adds an intriguing layer. Learn why this scenario is viewed as structural, not just cyclical.
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QT Ends When Fed Stops Portfolio Runoff
- Ending QT means the Fed will stop shrinking its securities holdings and will replenish bonds as they mature.
- That keeps the SOMA portfolio flat instead of letting aggregate securities decline further.
T‑Bill Supply Is Pressuring Repo Markets
- Large T-bill issuance forces dealers to warehouse inventory and push financing into the repo market.
- Rising SOFR rates and volumes signal that too many bills are straining repo plumbing.
Monitor Fed Moves Into Bills And Reserves
- Watch mortgage principal inflows because the Fed can use that cash to buy bills and ease repo pressure.
- Track announcements where the Fed stops QT first, then prepares tools to increase reserves.