2025-12-27 13:20:59

The Federal Reserve's liquidity injection efforts continue to intensify. Since the beginning of 2025, a total of over 120 billion has been injected, including an additional 2.5 billion yesterday for overnight repurchase operations, with MBS accounting for as much as 85.5% of the collateral. Three rate cuts have been implemented this year, totaling a reduction of 75 basis points, with the current federal funds rate stable in the 3.5%-3.75% range.

What is the deeper meaning behind these series of measures? Institutions generally believe that the Federal Reserve is paving the way for larger-scale easing policies in 2026. Market forecasts suggest that there may be 2-3 rate cuts next year, with a total reduction of 50-75 basis points, and the "high liquidity" goal promoted by the Trump administration also provides political support for easing policies.

The crypto market reacts sensitively to this. On the day of the rate cut announcement in December, BTC surged briefly; ZEC saw a maximum increase of 17.99% over the past 30 days; the US stock Dow Jones rose over 1%, and the US dollar index hit a new low for the month — all of these are direct reflections of abundant liquidity.

However, caution is needed as not all voices support easing. Core PCE inflation data remains at 2.9%, above the Fed’s 2% target. Seven Fed officials oppose the rate cut plan for 2026, and policy disagreements are increasing market volatility. Traders should focus on whether subsequent weekly repurchase scales break through 2.5 billion, the latest guidance from the January FOMC dot plot, and changes in trading volume, avoiding blindly chasing gains.

BTC0,06%

ZEC15,23%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

8 Likes

Reward
8
4
Repost
Share

Comment

0/400

AlphaLeaker

· 41m ago

Liquidity frenzy, but inflation isn't ready to give up yet. Can this last until 2026? --- The Federal Reserve hit the accelerator, the crypto market is excited, but I feel like this is just paving the way for a subsequent crash. --- A 120 billion infusion sounds great, but with 7 members opposing, how will the market stay stable with such big disagreements? --- ZEC up 17.99% is already quite exaggerated, but this kind of short-term surge is often a sign of a trap. --- People blindly chasing the rally are going to suffer heavy losses this time; inflation data hasn't even been suppressed yet. --- Trump's "high liquidity" policy ultimately boils down to votes, don't take it too seriously. --- MBS accounts for 85.5%, is the Fed betting that the housing market won't collapse? Quite bold. --- The day BTC surged, it should have been sold. Who's the fool now for chasing in? --- Core PCE at 2.9%, still far from the target. What's there to relax about? --- It's not too late to act until the January FOMC. Acting now just means handing over the reins to institutions.

View OriginalReply0

Ser_This_Is_A_Casino

· 7h ago

1.2 trillion pouring in, the crypto market is soaring directly, this is the rhythm I like. ZEC up 17.99% is nothing, wait until the FOMC dot plot comes out and see. Seven members opposed within the Federal Reserve? Haha, just political games, they will still have to loosen eventually. Inflation at 2.9% is indeed annoying, but compared to the easing expectations in 2026, it's all just clouds. I just want to know if next week's repurchase can break 25 billion, that would be a real signal. The high proportion of MBS means the housing chain is about to explode. Trump needs liquidity, so we follow and eat the meat, why bother with so much? Don’t tell me you can make money just by watching the dot plot; this market is just gambling anyway. I was still sleeping when BTC surged; so frustrating. Basically, the liquidity cycle is here, and the rest is up to technical analysis.

View OriginalReply0

BearMarketNoodler

· 7h ago

The Fed's move, to put it simply, is paving the way for a big liquidity injection next year. The 120 billion dollar infusion is indeed quite aggressive, but the key is to see what the seven dissenters are up to. PCE is still stuck at 2.9%.

View OriginalReply0

OnchainSniper

· 8h ago

Liquidity injection is so aggressive, yet BTC hasn't rallied. Do you understand what this indicates? Inflation remains high, with 7 Federal Reserve members dissenting. It feels like the risks are underestimated. With such a high proportion of MBS, they are still desperately repurchasing. Are they really just trying to prolong their survival? The expectation of rate cuts in 2026 was already uncertain, and now the market is so bullish. It will be painful if it drops later. On the day BTC surged earlier this year, I didn't chase it. It felt too easy. Now I'm more focused on the FOMC dot plot. The key is whether the 25 billion mark can be broken. Only then will it truly be unleashed. Trump wants high liquidity, but inflation is still there. This isn't a simple matter.

View OriginalReply0