{"id":13371,"date":"2026-09-17T11:24:41","date_gmt":"2026-09-17T11:24:41","guid":{"rendered":"https:\/\/cryptonews.uk.com\/?p=13371"},"modified":"2026-09-17T11:24:41","modified_gmt":"2026-09-17T11:24:41","slug":"why-the-fed-balance-sheet-is-lying-to-you-about-the-next-bitcoin-rally","status":"publish","type":"post","link":"https:\/\/cryptonews.uk.com\/?p=13371","title":{"rendered":"Why the Fed balance sheet is lying to you about the next Bitcoin rally"},"content":{"rendered":"

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On Sept. 16, the Federal Reserve tightened short-term monetary policy while leaving its reserve-management toolkit in place. The Federal Open Market Committee raised the federal-funds target range by a quarter point to 3.75%\u20134.00% and continued its policy of maintaining ample bank reserves.<\/p>\n

The accompanying implementation directive set the interest rate paid on reserve balances at 3.90%, effective Sept. 17. It also retained conditional authority for the New York Fed trading desk to buy Treasury bills and, if needed, other Treasuries with no more than three years remaining to maintain ample reserves.<\/p>\n

Each action serves a separate function. A higher administered rate transmits the tighter target range, while reserve-management authority supports the operating system used to keep overnight rates under control. Bitcoin liquidity depends on how those policies reach financial markets, beyond the size of the Fed’s balance sheet.<\/p>\n

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Related Reading<\/span><\/p>\n

Why Bitcoin initially held its gain as rate traders put September hike odds at 85%<\/h3>\n<\/p>\n

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How reserve plumbing differs from QE<\/h2>\n

QE is designed to ease monetary policy. It typically uses large-scale purchases of longer-term Treasuries and agency mortgage-backed securities to remove duration risk from private portfolios, press down on longer-term rates and loosen broader financial conditions.<\/p>\n

Reserve-management purchases, or RMPs, have a narrower purpose. They add reserves through purchases of bills and other short-dated Treasuries so the Fed can implement its chosen short-term rate as currency, Treasury balances and other liabilities change.<\/p>\n

Vice Chair Philip Jefferson made that distinction in January, describing QE as a stimulus tool that removes duration risk and RMPs as an instrument for maintaining ample reserves and effective short-rate control. New York Fed markets chief Roberto Perli separately said the 2026 reserve-management purchases had been entirely in bills and contrasted them with longer-duration purchases used to ease financial conditions.<\/p>\n

That division of labor allows Fed assets to rise while the policy stance tightens. Balance-sheet direction records changes in the central bank’s assets and liabilities. The purpose, maturity and transmission of the purchases determine what those changes mean for policy.<\/p>\n

The September directive continued an RMP framework launched in December 2025, and the New York Fed says the monthly amount is not on a preset path. Its current operations schedule sets RMPs at zero for the Sept. 15\u2013Oct. 14 period. The schedule includes about $15.6 billion of Treasury-bill purchases funded by principal payments from agency securities, a reinvestment flow separate from net RMP buying.<\/p>\n

The trading desk retains the capacity to add short Treasuries when appropriate. Its published schedule shows that capacity currently unused for RMPs, sharply limiting claims of an immediate fresh reserve injection.<\/p>\n