Chart showing Federal Reserve repo injections alongside rising global liquidity and Bitcoin price consolidation. Photo by BeInCrypto
The Federal Reserve (Fed) injected $16 billion into the US banking system on December 30, marking the second-largest liquidity operation since the COVID-19 crisis. These funds were supplied through overnight repurchase agreements (repos), pushing the total amount of Treasury securities purchased via repos in December to $40.32 billion.
The scale of the intervention has reignited debate over hidden stress in short-term funding markets, and what rising global liquidity ultimately means for risk assets, including Bitcoin.
According to Barchart, the December 30 operation ranked just behind pandemic-era emergency measures in size.
Financial commentator Andrew Lokenauth echoed the concern, noting that such a large injection suggests “everything is fine” only on the surface. In a separate post, Lokenauth compared the situation to banks promising assets they do not fully control.
He argues that institutions now require cash to cover obligations tied to commodities and collateral mismatches.
The Federal Reserve’s overnight repo facility enables eligible counterparties to exchange Treasuries for cash at a fixed rate. This allows the central bank to maintain control over short-term interest rates.
While the Fed routinely uses repos around quarter- and year-end, December’s total of $40.32 billion stands out. Bluekurtic Market Insights described the activity as ongoing “liquidity support,” highlighting that demand has remained elevated throughout the month.
General sentiment is that the surge reflects year-end balance sheet constraints rather than an outright crisis. Banks face tighter regulatory requirements at reporting periods, which often reduces their willingness to lend in private repo markets.
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