After almost three years of tight monetary policy, the Federal Reserve System of the USA has begun to cautiously return liquidity to the financial system. Not loudly, without announcements of new stimulus, but quite tangibly. Purchases of government bonds worth tens of billions of dollars are already changing market behavior and investor sentiment.
Crypto blogger Coin22 drew attention to this. In the video, he analyzed the actions of the Fed, shared his observations on how new liquidity is spreading through the financial system, and separately stopped at why bitcoin looks weaker than stocks for now.
Bond purchases without loud words
After the December 10 meeting, the Fed began to buy short-term U.S. Treasury bonds. The total volume of the program is about $40,000,000,000 over 30 days. The first deals took place on Friday, and this moment was perceived by many market participants as the actual start of a new stage.
Formally, the regulator avoids words like 'stimulus' or 'quantitative easing.' In practice, additional money is flowing into the system. And markets, as experience shows, care much more about liquidity movement than careful wording in press releases.
How money enters the system
The mechanics are quite straightforward. The Fed buys short-term government bonds from primary dealers — the largest banks and financial houses like JPMorgan, Goldman Sachs, and Citi. In return, the funds are credited to their reserve accounts at the Fed.
The output results in a simple picture: banks have more dollars, tension in the money market is decreasing, and the room for maneuver is expanding. Private investors do not see this money directly, but liquidity is beginning to spread through the system — via loans, repos, fund financing, and trading strategies.
The process is not fast. But it is steady.
Where liquidity is primarily going
History suggests: first, money almost always goes into stocks. Indexes, large funds, blue chips. The most familiar route for large capitals.
In the current conditions, the distribution looks approximately like this:
about 60–65% of liquidity supports the stock market;
up to 15% over time may find itself in spot bitcoin;
the rest is spread among bonds, derivatives, and alternative instruments.
The crypto market in such cycles almost always lags. First, funds return to risk, then volumes increase, and only after that does capital begin to seek its way into digital assets.
Why bitcoin still gets its share
The Fed does not buy bitcoin and does not intend to do so. The flow looks more complex: Fed → banks → funds → ETFs → spot market.
When funds enter bitcoin through ETFs, providers are forced to buy the real asset. Without derivative bypasses. Even an inflow of $6–8 billion over a relatively short period is comparable to several weeks of active institutional purchases and can significantly affect the price.
Not instantly. But with a cumulative effect.
Rate, inflation, and the cautious tone of the Fed
At the last meeting, the Fed lowered the rate by another 0.25%. The cumulative reduction since September reached 0.75%. The regulator made it clear: the policy is in a neutral zone and is no longer consciously pressuring the economy.
Several important strokes:
the scenario of rate hikes has disappeared from the agenda;
a pause or further decline remain the main options;
the market estimates the probability of a rate decrease in January at about 20%;
the target for 2026–2027 remains in the range of 3–4%.
Inflation sounds calmer than before. Pressure from tariffs is being called temporary, with expectations of its peak in the first quarter. Unemployment, meanwhile, is gradually rising, and this factor is becoming increasingly difficult to ignore.
The stock market feels more confident
The rise in liquidity quickly reflected on traditional markets. The S&P 500 has approached historical highs again. The dollar has been steadily weakening since the end of November. Risk appetite is returning.
Against this backdrop, bitcoin looks strangely restrained. Coin22 links this not to macroeconomic factors but to the behavior of major players who continue to operate through liquidations and pressure on price.
At the opening of American trading sessions, sharp downward movements are increasingly appearing without apparent news. Such impulses are convenient for liquidity gathering and squeezing long positions.
The scenario is familiar. Weak hands exit, a sense of anxiety is created, and major participants get the opportunity to accumulate positions at a lower price. The difference from past cycles is that there is no longer a hard monetary tightening from the Fed.
The Bank of Japan factor
The Bank of Japan deserves separate mention. The yen has been fuel for the global carry trade for many years. Money was borrowed almost for free and directed into stocks, bonds, and cryptocurrencies. Estimates of the volume of such strategies fluctuate from $500,000,000,000 to $1,000,000,000,000.
A rate hike even by 0.1–0.25% can change the behavior of capital. In the past, such expectations led to corrections in the stock market by 7–10% and a drop in bitcoin by 12–15%.
The background looks different now. The Fed has already eased conditions, initiated bond purchases, and is creating a liquidity cushion. There may be a shock, but it is unlikely to be prolonged.
What is happening with bitcoin right now
The price is stuck in a narrow range. The area around $94,000 remains a strong resistance. Above it, the market does not feel confident yet.
At the same time, the structure is changing. The lows are getting higher, selling pressure is weakening, and aggressive buying is reappearing in the spot market. The picture resembles more of the end of a correction than a reversal into a bearish phase.
Short-term holders who bought bitcoin at the beginning of 2025 found themselves at a loss of about 10%. Such zones often drag on longer than one would like. Any bounce is used for exiting without losses.
New large investors have recorded losses of about $386,000,000 in a short period. Old participants react much more calmly. Usually, such a distribution of tension arises closer to the end of corrections.
Liquidations and zones of interest for major players
The market is skewed towards long positions. As it approaches $82,800, the volume of liquidations in bitcoin could exceed $5,100,000,000. For Ethereum, the zone around $2,900 carries the risk of liquidations exceeding $4,400,000,000.
The main liquidity zones for bitcoin are currently in the ranges of $88,000–$89,000 and $93,000–$94,000. Short-term downward pressure followed by a reversal seems logical from the perspective of major players and fits well into the recent weeks of price movement.
The overall picture without unnecessary pathos
The Fed has already returned liquidity to the system, albeit without loud statements. The main flow of money initially supports stocks, but over time part of the capital reaches the crypto market.
Risks from the Bank of Japan remain, but they appear manageable. Given the current position of the Fed, sharp downward movements in bitcoin resemble working corrections more than a cycle change.
The market is nervous, sensitive, at times jittery. But the foundation beneath it is now completely different from the moments when long bear periods actually began.
Do you want to be part of a large and friendly BIC community? Then join our group on Telegram — there you will find communication with crypto enthusiasts, assistance from our experts, and exclusive comments from experienced analysts.
