bitcoin has declined nearly 30% from its all-time high of $126,000 in early October 2025, signaling a persistent slump in the crypto . The Federal Reserve's recent announcement to purchase $40 billion in Treasury bills monthly aims to ensure ample bank reserves. Analysts debate if this move, distinct from traditional QE, will influence digital assets.
The Fed emphasizes that these purchases maintain liquidity in short-term funding markets rather than stimulate the broader economy. This approach follows quantitative tightening that reduced reserves by $2.4 trillion.
Understanding the Fed's Reserve Management
The central bank plans to buy $40 billion in bills each month starting December 12, 2025, to prevent reserve shortages like those in 2019. Unlike past QE programs, this focuses on technical adjustments for stability in money markets.
Bank of America notes that the
QE-like
effects might lower longer-term bond yields, indirectly supporting risk assets. However, it differs from expansive asset purchases that flooded markets during crises.
Current State of the Crypto market
Crypto markets show weakness, with bitcoin dominance rising to 58.7% as altcoins lag. Ether's share fell to 11.6%, indicating capital outflows from major digital assets.
The broader slump persists into December 2025, driven by retail and institutional shifts that strengthen bitcoin's correlation with equities. Investors face heightened fears amid this reversal.
Potential Impact on Crypto and Web3
Some view the Fed's action as mild quantitative easing that boosts USD liquidity, potentially benefiting cefi and defi sectors. Yet, bitcoin dipped 7% to around $87,000 post-announcement, suggesting limited immediate stimulus for risk assets.
According to CryptoSlate, bulls see it as
Quiet QE,
but it may trap liquidity without sparking a rally. This could affect adoption in metaverse and NFTs, where funding remains cautious.
Esther George, former Fed official, states the rate cut aligns with expectations, and bill purchases may ease liquidity concerns without major economic boosts. Her view underscores the neutral stance on broader market impacts.
Implications for DeFi, Technology, and Regulation
In defi, increased liquidity might encourage technology innovations, but security concerns persist amid market volatility. Regulation plays a key role, as clearer policies could drive adoption.
Funding in Web3 projects faces hurdles in this slump, with investors prioritizing established assets over uncategorized ventures. CeFi platforms may see inflows if traditional finance stabilizes.
Analysts from RIA highlight that QE-like liquidity boosts asset prices, yet this targeted purchase might not fully revive crypto's momentum. market participants should monitor for shifts in engagement metrics.
Broader Trends in Crypto Funding and Security
Crypto funding trends show caution, with a potential $3 trillion market collapse warning for 2026 if slumps deepen. Security protocols gain importance as regulation evolves to protect investors.
Metaverse and NFTs struggle in this environment, requiring stronger adoption strategies to attract funding. Technology advancements in blockchain could mitigate some risks.
This Fed action underscores the link between traditional monetary policy and crypto dynamics. Investors gain value by analyzing these interconnections for informed decisions in Web3 ecosystems.
