Bitcoin (BTC) gained a classic macro bull signal into Tuesday as the US Federal Reserve injected $13.5 billion of liquidity.
Key points:
Fed liquidity operations send a message to crypto and risk assets as the Dec. 1 total rivaled the COVID-19 era.
Markets still see interest rates coming down despite rumors over Japan.
Analysis warns that Bitcoin could still be a leading indicator of a major risk-asset “reversion.”
Fed repo tally beats dot-com bubble
Fed data uploaded to X by analytics platform Barchart confirmed a snap end to the latest round of quantitative tightening (QT).
Bitcoin and risk assets can enjoy a fresh liquidity impulse as the Fed officially stops shrinking its balance sheet this month.
The latest figures covering overnight repurchase, or repo, transactions show that $13.5 billion of liquidity entered the banking system on Tuesday.
That number stands out, being the second-largest overnight tally since the beginning of the COVID-19 pandemic, which sent stock markets worldwide crashing.
“Probably Fine, carry on,” it commented, noting that the total even surpassed the height of the dotcom bubble.
The move comes at a precarious time for the worldwide central-bank easing process in place throughout 2025. As Cointelegraph reported, concerns over Japan’s financial stability have led to bets that its central bank will tighten conditions this month.
At the same time, markets expect the Fed to cut rates at its Dec. 10 meeting, and continue doing so into next year — key for risk-asset liquidity.
“With December historically one of the strongest months for the market, upside momentum is strong,” trading resource The Kobeissi Letter wrote about US stocks Tuesday.
“The bulls are in control.”
Bitcoin risks leading downhill risk-asset “reversion”
Despite optimism over equities capitalizing on existing 2025 gains, crypto continues to diverge in an increasingly bearish manner.
Related: BTC price dips under $84K as Bitcoin faces ‘pivotal’ week for 2025 candle
For Mike McGlone, senior commodity strategist at Bloomberg Intelligence, the writing could be on the wall for risk assets as a result.
“Extreme stock market complacency may suggest further downside in risk-assets, with Bitcoin leading the way,” he told X followers Monday.
McGlone used historical valuations of Bitcoin versus gold as grounds to expect a “reversion” lower. If BTC/USD should trade at around 13 times that of XAU/USD, a Bitcoin price of just over $50,000 would result.
“At about 20x on Dec. 1, the Bloomberg Economics’ model shows the Bitcoin/gold cross fair value closer to 13x and a top reason to get there -- S&P 500 120-day volatility is approaching its lowest year-end since 2017,” he reported.
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