Bank of Canada to End Quantitative Tightening

Bank of Canada Ends Quantitative Tightening

The Bank of Canada has announced the end of quantitative tightening, planning to complete its balance sheet normalization. Starting in early March, the bank will begin purchasing assets as part of normal balance sheet management to replace maturing assets, offset currency note growth, and stabilize settlement balances.

Potential Impact on Markets

The speaker believes that what the Bank of Canada does is largely irrelevant to markets but notes that if other central banks, like the Federal Reserve, follow suit, it could have significant implications. The Federal Reserve's decision on quantitative tightening will be more important, and the market is awaiting Fed Chairman Powell's statement.

Bitcoin Dominance and ETH/BTC

The speaker discusses bitcoin dominance, which has reached 60%, and the potential for it to go back above 60%. They also analyze the ETH/BTC chart, noticing a pattern that could lead to a sweep of the high and a potential sell-off.

Historical Context and Market Cycles

The speaker draws comparisons to the 2016 cycle, where the end of quantitative tightening led to a bottom in ETH/BTC. However, they note that the current cycle is different, and the market may not react the same way. They also discuss the importance of distinguishing between alt/BTC and alt/USD pairs.

Nuances and Expectations

The speaker emphasizes that the end of quantitative tightening does not necessarily mean that all coins will immediately go up. They caution against high expectations and suggest that market conditions will change with monetary policy shifts.

ETH/USD and Potential Final Drop

The speaker discusses the potential for ETH/USD to get a final drop before a big move up, similar to what happened in 2016. They note that the Bank of Japan's rate hikes could influence the market and that a final drop in ETH/USD could occur after the Fed ends quantitative tightening.

Investment Strategy and Valuations

The speaker believes that ETH/BTC is at an attractive valuation at 0.03 and suggests that it's likely to go to new all-time highs within the next 12 months. However, they caution against putting too much weight into historical patterns and emphasize the importance of considering market nuances.

Fundamental Perspective and Monetary Policy

The speaker discusses why bitcoin dropped when the Fed ended quantitative tightening last cycle, suggesting that the bid for bitcoin disappeared as people stopped converting alts to bitcoin. They also note that bitcoin dominance tends to drop in post-having years.

Conclusion and Market Outlook

The speaker concludes by emphasizing that all bitcoin pairs and USD pairs are different and that market shifts can take time. They caution against expecting immediate moonshots and remind viewers that quantitative tightening ending is not the same as quantitative easing beginning.