The US Federal Reserve, after a prolonged period of tight monetary policy, has begun returning liquidity to the financial system. This is happening without major announcements of new stimulus, but the purchase of tens of billions of dollars in government bonds is already noticeably impacting markets and investor sentiment.
Start of Fed Liquidity Injection
Since December 10, the Fed has started buying short-term US Treasury bonds. The program is set at around $40 billion over 30 days. Although the regulator avoids terms like "stimulus" or "quantitative easing," markets have interpreted these actions as the beginning of a new phase of financial system support. In practice, additional funds are entering the economy, which matters more than formal wording.
How Money Enters the Financial System
The Fed acquires short-term bonds from major banks such as JPMorgan, Goldman Sachs, and Citi. In return, banks receive funds in their reserve accounts at the Fed. This eases pressure on the money market and expands opportunities for lending and other operations. Liquidity gradually spreads through the system via loans, repo transactions, and fund financing, though this process takes time.
Liquidity Distribution and Market Reaction
New funds first flow into the stock market—into shares, indices, and large funds. The cryptocurrency market usually reacts with a delay: interest in risk assets rises first, and then some capital shifts to digital assets. As liquidity increases, the S&P 500 index has again approached historic highs, while the dollar has shown persistent weakness since late November. Meanwhile, Bitcoin appears less dynamic compared to stocks.
For more on how a Fed rate cut affects the crypto market, see the article Fed Rate Cut in December 2025: Impact on Bitcoin and Altcoins.
Bitcoin’s Behavior
Liquidity reaches Bitcoin through a complex chain: banks — funds — ETFs — spot market. When funds buy Bitcoin through ETFs, providers are forced to purchase the actual asset, creating a cumulative effect. Despite this, short-term Bitcoin holders who bought in early 2025 are currently at a loss of about 10%. New large investors have also recorded losses of around $386 million. However, signs of aggressive buying are emerging, and price structure indicates a possible end to the correction.
Read more about institutional investors' impact on Bitcoin’s price in the article How Reduced Institutional Investment Affects Bitcoin’s Price.
Impact of the Bank of Japan and Global Factors
The Bank of Japan has traditionally been a source of cheap liquidity for global markets, including cryptocurrencies. The volume of yen carry trade is estimated at $500 billion to $1 trillion. Even a slight rate hike could trigger corrections in the stock and crypto markets. However, the Fed has already eased conditions and created an additional liquidity buffer, reducing the likelihood of prolonged negative consequences.
Current Situation and Bitcoin Outlook
Bitcoin is trading in a narrow range, with the area around $94,000 remaining a strong resistance level. Lows are gradually rising, selling pressure is easing, and aggressive buying is visible on the spot market. Short-term holders and new investors are still incurring losses, but the market structure resembles the end of a correction rather than the start of a new bear cycle.
Potential Bitcoin liquidations if the price drops to $82,800 could exceed $5.1 billion, while for Ethereum around $2,900—over $4.4 billion. The main Bitcoin liquidity zones are in the $88,000–$89,000 and $93,000–$94,000 ranges.
For an analysis of the current crypto market situation, see the article Current Crypto Market Situation in November 2024: Binance Research Analysis.
Why This Matters
For miners in Russia, understanding the Fed’s liquidity injection mechanisms helps assess overall market sentiment and potential Bitcoin price movements. Liquidity growth first supports traditional markets, but eventually impacts cryptocurrencies as well. This can affect mining profitability and asset management strategies, especially during periods of volatility.
What to Do?
- Monitor actions by the Fed and the Bank of Japan—their policies directly impact liquidity and crypto asset prices.
- Assess liquidation risks, especially if you use leverage or trade on short timeframes.
- View current volatility as part of the market cycle, not as a sign of a long-term downturn.
- Analyze Bitcoin resistance and support zones to make more informed mining and selling decisions.
