Federal Reserve's expectation of QE restart in 2026: the "engine" of the encryption bull run or a "mirage"?

Recently, Deutsche Bank made a major prediction: the Federal Reserve will restart quantitative easing (QE) in the first quarter of 2026. This statement has caused a stir in the encryption market, with many investors viewing it as the "engine" for the next bull run. However, when we strip away the optimistic expectations and delve into the prerequisites for restarting QE, the policy transmission mechanisms, and the current market environment, we find that this narrative is far from a done deal, but rather resembles a "macro bet" that requires multiple conditions to align.

1. QE Restart Prediction: Deutsche Bank's Logic and Controversy

Deutsche Bank's core argument

Deutsche Bank predicts the restart of QE in Q1 2026, mainly based on three major logics:

1. The job market has significantly cooled: In October, U.S. companies laid off 153,000 workers, a month-on-month surge of 183%, setting a record high for a single month since 2003. The ADP weekly employment trend also shows that hiring activity continues to slow down.

2. The tightening cycle is nearing its end: The Federal Reserve has made it clear that it will end the balance sheet reduction (QT) in the "coming months," which is the first step towards QE.

3. Historical Laws of Policy Shift: The institution accurately predicted in 2024 that the Federal Reserve would end QT, thus its forward-looking judgment carries a certain weight in the market.

The prediction has rapidly gained traction in the encryption community, with KOLs like @cryptorover describing it as a "money printer reboot signal," believing it will directly benefit liquidity-sensitive assets like BTC and ETH.

Key Controversy: There is a huge gap between "ending QT" and "restarting QE".

However, most institutional analyses hold a cautious attitude towards "2026 QE":

1. Interest rates are far from meeting the standards: Currently, the Federal Reserve's interest rate is 4.00%-4.25%, while historically, QE has started when interest rates are close to zero (0%-0.25% in 2008 and 2020). Finet's macro outlook clearly states that the likelihood of "actively expanding the balance sheet" (restarting QE) in 2026 is low. Guggenheim's CIO also believes that the Federal Reserve may "pause rate cuts" in 2026, rather than initiating QE.

2. The economy has not reached a "disastrous level": The QE in 2020 was triggered by the pandemic-induced economic standstill, while the 2008 QE was to respond to the financial crisis. Currently, although the U.S. economy is slowing down, it is still some distance from a recession. Powell hinted at "ending QT" but did not mention QE, only stating that he would maintain "ample reserves."

3. Time window mismatch: Deutsche Bank predicts the start of QE in Q1 2026, but if we calculate based on a 25bp rate cut each time, it would take 8-10 months to drop from 4% to below 1%. This means that the Federal Reserve needs to start aggressive rate cuts in Q4 2025, and then urgently turn to QE before the economy has bottomed out, indicating a jump in policy logic.

Conclusion: The restart of QE is not impossible, but it requires an economic hard landing or financial crisis as a trigger condition. In the baseline scenario, 2026 is more likely to be a "continuation of the interest rate cut cycle" rather than a "restart of QE."

2. The Liquidity Transmission of the Encryption Market: Will History Simply Repeat Itself?

The special conditions of the QE bull run in 2020

From March 2020 to November 2021, the Federal Reserve's QE scale reached 4.2 trillion USD, and BTC rose from 8,000 USD to 69,000 USD, an increase of over 700%. However, that bull run was built on four unique foundations:

• Zero interest rate environment: Federal funds rate 0%-0.25%, opportunity cost of holding cash is zero.

• Retail-driven: Institutional holdings account for only 15%, making market sentiment easily amplified.

• Halving cycle overlay: After the halving in May 2020, the new supply halved, forming a strong contrast with the increase in QE.

• Pandemic lockdown catalyst: Global liquidity has nowhere to go, and the encryption market has become the only 24/7 trading venue.

The fundamental differences in the environment in 2026

If QE really restarts in 2026, its effects will be significantly weaker than in 2020:

1. Increased institutionalization: Currently, institutional holdings account for over 55%, and trading behavior is more rational, with a muted response to liquidity. Although there has been significant inflow of ETF funds, it has also been hedged by net outflows (over 1.2 billion USD net outflow in the 12 days before November).

2. Higher starting interest rates: Even if the interest rate drops to 3% in Q1 2026, it will still be much higher than the zero level in 2020. The opportunity cost of holding BTC (measured in real interest rates) will weaken some allocation demand.

3. Larger market capacity: The market capitalization of BTC increased from 150 billion USD in 2020 to 2 trillion USD, and the growth driven by liquidity of the same scale will significantly shrink. Deutsche Bank expects the scale of QE to be 75-100 billion USD per month, which is only 1/4 of that in 2020.

4. Complete regulatory framework: The institutional construction of spot ETFs, custody supervision, tax declaration, etc., has reduced the "avoidance of scrutiny" premium for encryption assets.

Core judgment: Liquidity easing is definitely beneficial for the encryption market, but the increase may drop from 7-10 times in 2020 to 1.5-2 times. Investors need to adjust their return expectations and avoid being overly optimistic.

3. Potential Cryptocurrency Assessment: The Real Value of ETH and DeFi Derivatives

Ethereum (ETH): A Dual Engine for Technological Upgrades and Ecological Development

Fusaka Upgrade Expectations: The Fusaka upgrade scheduled for December 3rd is highly anticipated by the market. Historical experience shows that significant upgrades usually enhance network performance and reduce transaction fees, laying the foundation for an explosion of ecological applications. However, caution is warranted regarding the "buy the rumor, sell the news" effect - the upgrade has already been partially priced in.

Institutional holdings increase: Analysts have indeed pointed out that the proportion of institutional holdings in ETH has risen. As the leading smart contract platform, Ethereum's appeal to institutions lies in:

• Staking yield: The current staking rate is approximately 28%, with an annualized return of 3.5%-4%, which is attractive in a declining interest rate environment.

• DeFi ecosystem: TVL exceeds 100 billion USD, if funding costs decrease, the locked amount in DeFi is expected to rebound.

• Layer2 maturity: Layer2 solutions like Arbitrum and Optimism reduce transaction costs and enhance user experience.

Risk points: The ETH/BTC exchange rate continues to decline, indicating that funds are still flowing out of the ETH ecosystem; Layer 2 competition is diverting mainnet transaction fee revenue.

Decentralized Derivatives: Regulatory Arbitrage and Real Income Models

Decentralized perpetual contract exchanges represented by Hyperliquid showcase unique value:

• Regulatory arbitrage: No KYC required, attracting users worldwide who seek privacy. Against the backdrop of tightening regulations in various countries, this advantage will persist.

• Real income: a monthly income of $116 million, returning 97% of expenses to the ecosystem, creating a value capture closed loop. This stands in stark contrast to the "vampire attacks" of most DeFi projects in 2020, which lacked a profit model.

• Airdrop Incentives: A large-scale airdrop covering 94,000 wallets effectively activates user participation.

Long-term logic: Regardless of Federal Reserve policies, the real income model is the core of projects that transcend cycles. Hyperliquid's model demonstrates that DeFi has transitioned from the "subsidy era" to the "self-sustaining era."

Warning: The competition in the derivatives sector is fierce, and established projects like dYdX and GMX are also iterating, which may lead to market share fragmentation.

4. Operating Strategy: Finding a Balance Between Expectations and Reality

Short-term strategy (before data release): Defense is the priority.

• Position control: Before the Fusaka upgrade on December 3 and the Federal Reserve's interest rate meeting on December 11, positions should not exceed 50%.

• Volatility hedging: If holding spot, one can buy slightly out-of-the-money put options (BTC strike price $92,000), with a premium cost controlled at 1.5%.

• Data daily discipline: No new positions will be opened 2 hours before and after the release of PPI on November 25, import and export prices on December 3, and non-farm data on December 6.

Mid-term layout (before Q1 2026): batch investment

Trigger conditions: If the unemployment rate is continuously >4.5% for 3 months and CPI year-on-year <2.5%, a regular investment plan can be initiated.

• Core Assets: BTC and ETH account for 70%, gradually buying in the range of $90,000-95,000 (BTC) and $2,950-3,100 (ETH)

• High Beta Assets: 20% allocated to SOL, INJ, LINK, etc., capturing excess returns

• Cash reserves: 10% hold USDT, waiting for extreme panic opportunities (Fear Index < 20)

Long-term holding (throughout 2026): Ignore fluctuations and focus on fundamentals.

• Pillars of Faith: Bitcoin halving cycle (next halving in 2028), long-term inflow trend of ETF funds, increased institutional adoption rate

• Execution: Only buy and not sell, re-balance once every quarter, transferring profits from assets that have increased by more than 50% to those with smaller increases.

• Stop-loss: Only consider reducing positions to 30% when there is systemic risk in the market (such as regulatory bans or the collapse of major exchanges).

5. Risk Warning: The Trap of Overly Optimistic Expectations

Three major risk points:

1. QE expectations fall short: If the US economy achieves a "soft landing", the Federal Reserve may only lower interest rates without restarting QE. The probability of maintaining the interest rate in the range of 2.5%-3% in 2026 is greater, and liquidity improvement is limited.

2. Inflation rebound: If tariff policies continue to push the CPI above 4%, the Federal Reserve may be forced to raise interest rates again, leading to the "stagflation" nightmare, and the encryption market will face a double whammy from stocks and bonds.

3. Regulatory black swan: The attitude of the US SEC towards spot ETFs, the implementation progress of the EU MiCA legislation, and the regulatory policies of countries like Russia and India may independently trigger regional crashes, regardless of monetary policy.

Mindset: The Federal Reserve's policy is a "necessary but not sufficient condition". The rise of the encryption market also requires continuous inflow of institutional funds, an increase in on-chain activity, and the implementation of technological innovations, among other factors. Do not blindly go all-in due to QE expectations.

6. Conclusion: Maintain cautious optimism and closely monitor the prerequisites.

Deutsche Bank's 2026 QE forecast provides a long-term bullish option for the encryption market. However, viewing it as a "certainty event" is dangerous. A more rational framework is:

• Next 6 months: Trade "interest rate cut expectations", go long on weak data, and defend on strong data.

• First half of 2026: Observe whether the economy is hard landing; if recession signals appear, then heavily invest in QE beneficiary targets.

• Second half of 2026: If QE really starts, holding core assets will allow you to enjoy a liquidity feast.

Remember: opportunities are always reserved for those who are prepared, not for those with fantasies. Before the Federal Reserve presses the "printing press" button, make sure your system, discipline, and mindset are ready. Otherwise, when the bull run train arrives, you may still be on the platform regretting your decision to cut losses in the last round of crashes. #逆势上涨币种推荐 #美联储会议纪要将公布 #比特币行情观察

Disclaimer: This analysis is based on publicly available market data and institutional forecasts and does not constitute investment advice. The policy path of the Federal Reserve is highly uncertain, and the restart of QE must meet multiple economic prerequisites. The cryptocurrency market is highly volatile; please manage your positions and risk isolation strictly, and prudently assess your personal risk tolerance.