The final weeks of the year may bring a reversal across equities and cryptocurrency markets as fresh liquidity enters the financial system and U.S. monetary policy turns more supportive.
According to investment management firm ARK Invest, more than $70 billion has already flowed back into markets following the end of the record-long U.S. government shutdown.
The firm expects an additional $300 billion in liquidity to return over the next five to six weeks as the Treasury General Account continues to normalize.
ARK argues this influx of capital could help stabilize risk assets after months of pressure.
Another major catalyst is approaching.
On December 1, the U.S. Federal Reserve is scheduled to end its quantitative tightening program.
The central bank is then expected to pivot toward quantitative easing, a shift that would involve purchasing bonds to reduce borrowing costs and stimulate economic activity.
“With liquidity returning, quantitative tightening (QT) ending December 1st, and monetary policy turning supportive, we believe conditions are building for markets to potentially reverse recent drawdowns,” ARK wrote in a Wednesday post on X.
Crypto and AI Markets Expected to Benefit From Easing Liquidity Squeeze
Cathie Wood, ARK Invest’s CEO and chief investment officer, echoed the firm’s optimism in a post on Thursday.
She described the current environment as a “liquidity squeeze” that has limited upside for both cryptocurrency assets and artificial intelligence-focused equities.
Wood said this tight condition is likely to ease “in the next few weeks,” allowing markets to regain momentum.
Earlier this year, ARK released one of the boldest long-term Bitcoin forecasts in the industry.
The firm projected a $1.5 million Bitcoin price target for 2030 under its “bull case,” with a $300,000 target under the “bear case.”
Despite recent market pullbacks, the fund manager said its models have not changed.
“The stablecoins have accelerated, taking some of the role away from Bitcoin that we expected,” Wood said during a webinar on Monday.
“But the gold price appreciation has been far greater than we expected.”
“So net, our bull price, which most people focus on, really hasn’t changed.”
Analysts Expect Recovery but Bitcoin Must Reclaim Key Levels
Broader sentiment among analysts remains aligned with ARK’s outlook, emphasizing that improving macroeconomic conditions could fuel a strong end-of-year rally.
Arthur Hayes, co-founder of BitMEX, previously said Bitcoin could reach $250,000 if the Federal Reserve formally shifts to quantitative easing.
Still, analysts caution that the market must first regain critical technical levels.
According to Iliya Kalchev, a dispatch analyst at digital asset platform Nexo, cryptocurrency markets will lack conviction until Bitcoin trades back above $92,000.
Kalchev said a break above that level could “open the door to a broader recovery if macro conditions align.”
The coming weeks may determine whether liquidity and policy shifts are enough to reverse the recent downturn across digital assets.
