Bitcoin flashed a classic macro bull signal on Tuesday after the U.S. Federal Reserve pumped $13.5 billion in liquidity into the system.
Key points:
- The Fed’s latest liquidity operations delivered a clear signal to crypto and other risk assets, with the Dec. 1 injection reaching levels last seen during the COVID-19 era.
- Despite speculation around Japan, markets continue to price in rate cuts.
- Still, analysts caution that Bitcoin may be signaling a broader risk-asset “reversion” ahead.
Fed repo activity tops dot-com era levels
Fresh Fed data shared on X by analytics firm Barchart shows a sudden halt to the current phase of quantitative tightening. With the central bank set to stop shrinking its balance sheet this month, Bitcoin and other risk assets are getting a new dose of liquidity.
Overnight repo transactions injected $13.5 billion into the banking system on Tuesday — the second-largest single-day influx since the onset of the COVID-19 pandemic, when global markets plunged.
Barchart noted the outsized total, remarking that it even exceeded levels seen during the peak of the dot-com bubble: “Probably fine, carry on.”
The shift comes at a delicate moment for the global easing cycle underway in 2025. As Cointelegraph noted, worries about Japan’s financial stability have sparked expectations that its central bank may move to tighten policy this month.
Meanwhile, markets are pricing in a Fed rate cut at the Dec. 10 meeting, with expectations for further easing into next year — a crucial factor for risk-asset liquidity.
“December has historically been one of the strongest months for the market, and upside momentum remains robust,” trading newsletter The Kobeissi Letter noted Tuesday regarding U.S. stocks.
“The bulls are in control.”
Bitcoin may signal a broader risk-asset “reversion”
Even as equities build on their 2025 gains, crypto is diverging in a more bearish pattern. Bloomberg Intelligence senior commodity strategist Mike McGlone warned that Bitcoin could be leading a wider downturn in risk assets.
“Extreme stock market complacency may point to further downside in risk assets, with Bitcoin at the forefront,” he told followers on X Monday.
McGlone’s outlook is based on historical Bitcoin-to-gold valuations. According to his analysis, if BTC/USD aligned with roughly 13 times XAU/USD, Bitcoin’s fair value would sit just above $50,000.
“At around 20x on Dec. 1, Bloomberg Economics’ model shows the Bitcoin/gold cross trending toward 13x, with one key driver being S&P 500 120-day volatility nearing its lowest year-end level since 2017,” he noted.
