Risk assets like the S&P 500 have always moved in sync with the Fed's balance sheet.

This is because their balance sheet shows how much liquidity they're pumping into the market. More liquidity means assets pump, less liquidity means they struggle.

Right now, something's off. The $SPX is rallying, but the Fed's balance sheet has been shrinking for two years.

Here's what's interesting: The Fed is preparing to cut rates and inject liquidity. They're planning to slash QT by 80%, basically a mini rate cut.

If assets like the S&P and $BTC are holding strong despite a shrinking balance sheet, just imagine how bullish things will get when the Fed starts pouring liquidity back into the market.