I just noticed that many people are still confused about QE, which is a measure that impacts markets worldwide, so I want to share a basic understanding. Because if you understand it, reading the market will become much easier.

QE, or Quantitative Easing, is a form of monetary easing, where easing means relaxation. Central banks pump a huge amount of money into the economy by purchasing long-term financial assets, which increases cash in the market, lowers interest rates, and commercial banks have more funds to lend to customers for investment.

Its operation is quite straightforward: the central bank buys assets from financial institutions, which reduces borrowing costs. Companies and executives are thus motivated to borrow money to expand their businesses. At the same time, the central bank may also buy specific assets, such as mortgage-backed securities, to inject liquidity into that particular market.

But here’s where it gets more complex: the increased money supply causes the currency to weaken, imports become more expensive, inflation rises, and importantly, most of the money flows into asset markets like stocks, real estate, and gold rather than being spent in the regular economy.

The consequence is that the wealth gap widens because those who already own assets benefit more, while low-income people who spend more do not benefit as much. The accumulation of wealth among those with existing capital continues to grow.

When it comes to Bitcoin, gold, and stock markets, large amounts of money from QE often flow into these speculative assets, pushing their prices higher. But what’s notable is that compared to other assets, gold tends to fall too much during QE periods.

For investors nowadays, I think they should be cautious about the stock market because a lot of money is flowing in, but the overall economic picture is still unclear. Another interesting option is currency trading, because QE causes currencies to weaken. Investors can use tools like CFDs to sell weaker currencies and go long on more stable currencies to reduce risk and increase returns.

In summary, QE is a measure used by central banks when the economy is in recession. It involves injecting money into the system to encourage more investment and spending. But its side effects are significant: currency depreciation, high inflation, increased inequality, and asset bubbles worldwide. Understanding this easing helps investors see how markets move and prepare better.