The Fed may make a little-noticed move next week—starting in January next year, it will purchase $45 billion in Treasury securities each month. $BTC $ETH

The prediction from a former New York Fed analyst is based on the fact that bank reserve levels are approaching a critical threshold. The repo market has recently seen frequent rate fluctuations, which is usually an early sign of liquidity tightening. If there’s no preemptive intervention, there could be funding issues by year-end.

How will the $45 billion be allocated? Roughly like this: $20 billion will be used to offset regular maturing Treasuries and fluctuations in government spending, while the remaining $25 billion is essentially a “patch” for the balance sheet reduction (QT) that has been ongoing for the past three years. At the current pace, this purchasing plan will likely continue at least until mid-next year.

The timing is quite delicate. Powell’s term is almost up, and whoever the next chair is, a stable market environment will be needed during the transition. Rather than waiting for problems to erupt and then firefighting, it’s better to lay a solid liquidity foundation in advance. Technically, this marks a shift from quantitative tightening (QT) to a neutral stance; on a deeper level, it could be the prelude to a new round of easing.

Right now, the market’s focus is all on rate cuts. But the impact of balance sheet expansion is, in some ways, even more direct than a 25-basis-point cut—it changes the total amount of money in the system, not just the cost of borrowing.

Where will this added liquidity flow? Will risk assets benefit as a result? For the crypto market, such macro shifts are usually more noteworthy than short-term news. What do you think?