cryptoanalysis

Michael Burry, the legendary investor known from The Big Short, is sounding alarm bells over the latest move by the U.S. Federal Reserve. The Fed plans to purchase $40 billion worth of Treasury bills (T-bills) within 30 days – a move Burry sees not as a show of strength, but as a signal of growing fragility in the banking system.

Burry: This is a bailout, not stability
Federal Reserve Chairman Jerome Powell claims the bond purchases are not a form of quantitative easing (QE). But Burry disagrees. He argues this is a disguised intervention aimed at stabilizing struggling banks still recovering from the 2023 mini-bank crisis.
He especially criticizes the Fed’s use of the term “reserve management purchases” to describe the operation. According to Burry, it’s nothing more than a hidden bailout.
“If the U.S. banking system needs over $3 trillion in reserves just to function, that’s not strength – it’s weakness,” Burry warns.
He also notes that after every crisis, the Fed’s balance sheet expands permanently, making it a quasi-permanent sponsor of the financial markets.

Not QE? Burry says otherwise
Although the Fed officially ended quantitative tightening (QT), it has quietly begun injecting liquidity through repo operations. These injections have already triggered a moderate recovery in crypto-related stocks, Bitcoin, and altcoins.
Michael Burry sees this as evidence that the Fed is returning to QE – just under a different name. He also warns against misleading Wall Street advice promoting bank stocks, saying he avoids them entirely.

Cash over stocks: Burry’s strategy
Burry prefers holding cash in Treasury Money Market Funds, keeping amounts over the FDIC insurance limit of $250,000.
He also points to the U.S. Treasury’s aggressive issuance of short-term bonds and the Fed’s focus on purchasing them. This strategy helps suppress the yield on 10-year Treasuries. Following the last FOMC meeting, the yield on 2-month bonds (US2M) rose while the 10-year yield dropped.
With ongoing volatility in the repo market, analysts believe the Fed may have to take even more aggressive actions to avoid a year-end funding crisis – confirming Burry’s fears about systemic fragility.

Bitcoin Under Pressure: Could It Fall to $85,000?
Against this backdrop, the crypto market is seeing renewed volatility. Bitcoin’s price has dropped over 2% in the past 24 hours and currently trades at around $90,252.
Crypto analyst Ted Pillows warned that BTC’s failure to stay above the $93,000–$94,000 level and its drop after the Fed’s announcement signal potential downside risk toward $85,000.
He noted that the next major support zone lies between $88,000 and $89,000 – a level likely to be retested soon.

Miners Are Selling: Is Correction Ahead?
On the selling side, Bitcoin miners have started offloading their holdings. Marathon Digital Holdings (MARA) sold 275 BTC worth over $25 million, according to Lookonchain. These sell-offs could add downward pressure to the market, especially amid rising fears over Fed policy and liquidity.

#MichaelBurry , #bitcoin , #FederalReserve , #CryptoAnalysis , #cryptocurrency

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,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“

In December 2025, the US Federal Reserve announced it would resume purchasing short-term Treasury bills (T-bills) at a pace of $40 billion per month, starting December 12, 2025.
According to Fed Chair Jerome Powell, these purchases are not a return to quantitative easing (QE) but rather a technical measure to manage reserves and short-term market liquidity. The goal is to maintain ample banking reserves and stabilize short-term funding markets, without having a major impact on overall monetary policy.

Why Is the Fed Buying T-Bills?
After years of shrinking its balance sheet through quantitative tightening (QT) from nearly $9 trillion, the Fed has faced increasing signs of tight liquidity in money markets — especially in the repo market, where banks lend to each other overnight. Rising rates in these markets have driven up funding costs and volatility, prompting the Fed to step in.
By purchasing short-term Treasury bills, the Fed aims to inject liquidity and reduce stress in funding markets, particularly during the volatile holiday and year-end season.

Reserve Management vs. Quantitative Easing
The key difference lies in scope and purpose:
Quantitative easing (QE) refers to large-scale purchases of longer-term securities to lower long-term yields, inject liquidity, and stimulate economic growth. During past crises like 2008 and 2020, QE involved trillions in asset purchases and led to sharp stock market rallies.The current T-bill purchases, however, are part of a strategy called "reserve management purchases" — designed purely to stabilize bank reserves and short-term rates, without aiming to directly stimulate the economy.
Powell has repeatedly stated that this is not a monetary policy shift but a way to ensure smooth financial market operations.

What Does It Mean for Markets and Investors?
Market reactions were mixed:
Equities and bond yields rose slightly, reflecting improved liquidity expectations and lower short-term risk.Some market participants believe these operations could mimic QE effects by boosting sentiment and risk appetite, even if not intended as stimulus.Others caution that unless the Fed starts buying long-term securities in size, this is not true QE and should not be treated as such.
Is This Stealth QE?
Debates are intensifying across the financial community. Some argue the Fed is engaging in "stealth QE", as the mechanical effects on liquidity and reserves resemble past QE programs.
Others emphasize that QE is a clearly defined tool — one that requires large-scale long-term asset purchases with explicit goals to lower borrowing costs and increase credit availability. The current T-bill program doesn’t meet that definition.

Summary for Investors
The Fed is buying short-term Treasury bills at $40B per month to support market functioning and liquidity.These operations are not classified as QE, as they don’t aim to stimulate the broader economy or expand the Fed's balance sheet significantly.Some traders misinterpret any Fed bond buying as stimulus, but this can lead to confusion and overreactions.The focus now shifts to whether the Fed will continue or expand these operations into 2026 — and how markets will interpret future moves.

#Fed , #CryptoMarkets , #MarketLiquidation , #CryptoAnalysis , #CryptoCommunity

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Notice:
,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“