Bitcoin (BTC) received a classic macro bull signal on Tuesday as the US Federal Reserve introduced $13.5 billion of liquidity.
Key points:
Fed liquidity operations convey a strong message to crypto and risk assets, matching the totals from the COVID-19 period.
Markets anticipate a decline in interest rates, despite speculation regarding Japan.
Analysis suggests that Bitcoin might act as a leading indicator for a significant risk-asset “reversion.”
Fed repo tally surpasses dot-com bubble
Fed data shared on X by analytics platform Barchart indicated a sudden halt to the latest phase of quantitative tightening (QT).
Bitcoin and other risk assets stand to gain a new liquidity boost as the Fed officially ceases its balance sheet reduction this month.
The recent statistics on overnight repurchase, or repo, transactions reveal that $13.5 billion flowed into the banking system on Tuesday.
This figure is notable, being the second-highest overnight total since the onset of the COVID-19 pandemic, which caused global stock markets to plummet.
“Probably Fine, carry on,” it noted, pointing out that this amount even exceeded the peak of the dotcom bubble.
This development occurs at a critical juncture for the global central-bank easing trend continuing throughout 2025. As Cointelegraph highlighted, worries about Japan’s financial stability have sparked speculation that its central bank will tighten conditions this month.
Simultaneously, markets expect the Fed to reduce rates at its Dec. 10 meeting and continue through the upcoming year — crucial for risk-asset liquidity.
“With December typically one of the strongest months for markets, the upside momentum is robust,” trading source The Kobeissi Letter stated regarding US stocks on Tuesday.
“The bulls are in control.”
Bitcoin risks leading risk-asset “reversion”
Despite the positive outlook for equities capitalizing on the existing gains of 2025, crypto continues to diverge in a more bearish direction.
Related: BTC price dips below $84K as Bitcoin faces a ‘pivotal’ week for the 2025 candle
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, suggests potential trouble for risk assets as a result.
“Extreme stock market complacency might indicate further declines in risk-assets, with Bitcoin at the forefront,” he informed his X followers on Monday.
McGlone referenced historical Bitcoin valuations against gold as a basis for expecting a “reversion” downward. If BTC/USD trades around 13 times that of XAU/USD, a Bitcoin price exceeding $50,000 would result.
“At approximately 20x on Dec. 1, the Bloomberg Economics’ model indicates the Bitcoin/gold cross fair value is nearer to 13x, influenced by the S&P 500’s 120-day volatility nearing its lowest year-end levels since 2017,” he reported.
This article does not provide investment advice or recommendations. Every investment and trading decision involves risks, and readers are encouraged to conduct their own research.
