The Fed may be easing again without calling it QE In June 2022, the Federal Reserve began quantitative tightening. That means it allowed bonds to mature without replacing them, steadily shrinking the balance sheet and pulling liquidity out of the financial system. Over the next few years, roughly $2.4 trillion was removed as the balance sheet fell from peak levels. Then in late 2025, that decline stopped. The Fed’s balance sheet bottomed near $6.54 trillion and has now risen to around $6.71 trillion. That is roughly $170 billion added back from the lows. No major QE announcement or headline emergency program was launched. But the direction changed. That matters because balance sheet expansion increases system liquidity. More liquidity usually supports risk assets because excess capital starts moving into equities, crypto, and higher beta trades. Since that reversal: • Small caps have strengthened • Bitcoin has recovered sharply • Broader risk appetite has improved This does not mean every rally is caused by the Fed, but liquidity conditions matter more than most people realize. Many investors only watch interest rates. But balance sheet policy often moves markets before rate cuts even begin. The Fed may not be easing loudly, but it may already be easing quietly.