Can Fed Liquidity Trends Keep Bitcoin Away From $50,000?

Bitcoin (BTC) gained a classic macro bull signal into Tuesday as the US Federal Reserve injected $13.5 billion of liquidity. 

Key points:

• Fed liquidity operations send a message to crypto and risk assets as the Dec. 1 total rivaled the COVID-19 era.

• Markets still see interest rates coming down despite rumors over Japan.

• Analysis warns that Bitcoin could still be a leading indicator of a major risk-asset “reversion.”

Fed repo tally beats dot-com bubble

Fed data uploaded to X by analytics platform Barchart confirmed a snap end to the latest round of quantitative tightening (QT). 

Bitcoin and risk assets can enjoy a fresh liquidity impulse as the Fed officially stops shrinking its balance sheet this month.

The latest figures covering overnight repurchase, or repo, transactions show that $13.5 billion of liquidity entered the banking system on Tuesday.

That number stands out, being the second-largest overnight tally since the beginning of the COVID-19 pandemic, which sent stock markets worldwide crashing.

“Probably Fine, carry on,” it commented, noting that the total even surpassed the height of the dotcom bubble.

Fed overnight repo transactions. Source: Federal Reserve

The move comes at a precarious time for the worldwide central-bank easing process in place throughout 2025. As Cointelegraph reported, concerns over Japan’s financial stability have led to bets that its central bank will tighten conditions this month.

Source: CME Group FedWatch Tool

At the same time, markets expect the Fed to cut rates at its Dec. 10 meeting, and continue doing so into next year — key for risk-asset liquidity.

“With December historically one of the strongest months for the market, upside momentum is strong,” trading resource The Kobeissi Letter wrote about US stocks Tuesday. 

S&P 500 monthly gains data. Source: The Kobeissi Letter/X

Bitcoin risks leading downhill risk-asset “reversion”

Despite optimism over equities capitalizing on existing 2025 gains, crypto continues to diverge in an increasingly bearish manner.

Related: BTC price dips under $84K as Bitcoin faces ‘pivotal’ week for 2025 candle

For Mike McGlone, senior commodity strategist at Bloomberg Intelligence, the writing could be on the wall for risk assets as a result.

“Extreme stock market complacency may suggest further downside in risk-assets, with Bitcoin leading the way,” he told X followers Monday.

McGlone used historical valuations of Bitcoin versus gold as grounds to expect a “reversion” lower. If BTC/USD should trade at around 13 times that of XAU/USD, a Bitcoin price of just over $50,000 would result.

“At about 20x on Dec. 1, the Bloomberg Economics’ model shows the Bitcoin/gold cross fair value closer to 13x and a top reason to get there — S&P 500 120-day volatility is approaching its lowest year-end since 2017,” he reported.

Bitcoin versus gold data. Source: Mike McGlone/X

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Source: https://cointelegraph.com/news/bitcoin-battles-50k-price-target-fed-adds-13-5b-overnight-liquidity?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound