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Crypto Glossary/Quantitative Tightening

Quantitative Tightening

The opposite of QE, QT is a monetary policy used by central banks to reduce the money supply and control inflation.

Quantitative tightening (QT) is the exact opposite of Quantitative Easing (QE), and is marked by a reduction in money supply by central banks.

Under QT, a central bank sells government bonds or other assets that it holds. This reduction in the money supply can lead to higher interest rates, reduced lending, and decreased spending, which can help control inflation.

For market participants, QT is bearish, since it typically results in sell-offs in risky assets as entities flee to the safety of cash. Both traditional and crypto markets see price slumps during a QT phase.

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