The U.S. Federal Reserve’s decision to end Quantitative Tightening (QT) is already affecting crypto markets, including XRP and Bitcoin.
Meanwhile, crypto investor and author Paul Barron has argued that assets like XRP may be set to “bring the fire” as liquidity returns.
When Fed Brings Water, XRP Brings Fire
On Monday, the U.S. Federal Reserve ended its QT program. The move marked a major shift from months of liquidity tightening to a new phase of expansion.
To support this transition, the Fed injected over $13 billion into the financial system via overnight repo operations, its largest liquidity boost in years. Historically, such expansions tend to fuel crypto assets and strengthen stocks as market participation widens.
This backdrop prompted Barron’s analogy that liquidity doesn’t cool risk assets; it ignites them. Specifically, in his tweet, he remarked that “when the Fed brings water, Bitcoin, Ethereum, and XRP bring the fire.”
Market Outlook
Industry figures say the Fed’s pivot mirrors earlier cycles when liquidity injections led to significant Bitcoin rallies. On CNBC, Tom Lee, Chairman of BitMine, said that during the last QT-ending event, Bitcoin jumped nearly 20% within weeks. He expects a similar pattern could unfold before the end of the year.
Hedge fund manager James Lavish tweeted that over the past 16 years, the Fed has added $8.8 trillion in liquidity to the markets but removed only $3.2 trillion before “calling uncle” for the second time.
He explained that his bullish stance on Bitcoin stems from being bearish on the Fed and the ongoing impact on the dollar. Lavish sees Bitcoin serving as a hedge against that.
In the last 16 years, the Fed has added a total of $8.8 trillion of liquidity to markets and removed a total of just $3.2 trillion before calling *uncle* for the second time. So when people ask why I am so bullish on Bitcoin, it is simple. I am bearish on the Fed and what they… pic.twitter.com/Z9cY2J6JDE
— James Lavish (@jameslavish) December 2, 2025
Bitcoin and XRP Prices React Immediately
Bitcoin is already responding to the Fed’s shift. At press time, BTC is up 6.5% in 24 hours, touching $93,965 today. This represents its highest price over the last three weeks.
Meanwhile, XRP has surged more than 10%, reaching a weekly high of $2.22. XRP’s rise is also fueled by record inflows into newly launched XRP ETFs, which have now surpassed $800 million. Analysts even say the milestone could strengthen XRP’s breakout potential by 2026.
“Liquidity Era Favors Utility Tokens”
Community voices argue that the coming liquidity wave could amplify tokens with real-world use cases. XRP commentator X Finance Bull asserted that as liquidity returns:
“XRP is positioned to do what it was built for: move money at scale.”
He stressed that, unlike previous cycles driven mainly by hype, XRP now benefits from real-time settlement utility, institutional integrations, and ETFs. He concluded that when liquidity floods back in, it exposes which assets are truly ready for scale — and XRP is one of them.
Still, Some Caution Remains
Meanwhile, Into The Cryptoverse founder Benjamin Cowen offered a contrarian view. He warned that a short-term correction could emerge around December 10, when the Fed is expected to cut rates while the Bank of Japan may raise theirs.
Cowen noted that a similar setup in July 2024 triggered significant volatility, sending Bitcoin sharply lower before rebounding one week later. If the pattern repeats, Bitcoin may see another capitulation drop, forming a potential mid-December bottom.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
