Fed Executes Massive $13.5B Liquidity Injection; Crypto Reprices Higher on 'Silent' Liquidity Pump

Source: CoinEdition Original Title: Fed Executes Massive $13.5B Liquidity Injection; Crypto Reprices Higher on ‘Silent’ Liquidity Pump Original Link:

The Liquidity Injection

The crypto market’s $205 billion surge Wednesday was the direct downstream effect of a massive, under-the-radar liquidity injection by the Federal Reserve. While headlines focused on the formal end of Quantitative Tightening (QT), the Federal Reserve Bank of New York was actively flooding the banking system with cash via the repo market to stave off a collateral shortage.

Data confirms the Fed conducted a $13.5 billion overnight repurchase agreement (repo) operation on December 1. This intervention marks the second-largest liquidity injection since the 2020 crisis, exceeding levels seen even during the dotcom bubble.

Wall Street’s Spark

While the Fed provided the fuel, Wall Street provided the spark.

A major prime brokerage firm, known for managing significant cryptocurrency treasury portfolios, disclosed a $1.28 million position in the Volatility Shares Solana ETF via regulatory filings. The disclosure showed a holding of 58,000 shares of the Solana ETF.

The disclosure sent Solana (SOL) ripping 10.29% higher to $141.37, outperforming Bitcoin and Ethereum as traders front-ran the narrative of a potential Solana ETF approval.

Major Tokens Rally With Strong Volume

The CMC20 Index advanced by 7.32% to $196.2, reflecting broad stabilization across top cryptocurrencies and steady volume conditions. The latest data places the index at $195.74, up by 6.77% in the past day, supported by more than $5 million in turnover.

Bitcoin recovered to $92,845.05, gaining 6.44% over 24 hours. The cryptocurrency recorded a trading volume of $85.9 billion, underlining its role in leading the market bounce. Ethereum posted one of the strongest gains among major assets, rising 8.42% to $3,059.26, with daily volume topping $29.5 billion.

Stablecoin activity remained consistent, with USDT holding a $1.00 valuation and registering a 0.02% gain. XRP traded at $2.17, climbing by 7.13%, while BNB rose by 6.67% to $896.56. Solana outperformed most large-cap tokens, advancing with 10.29% to $141.37 on $7 billion in daily volume.

Derivatives: The Bearish ‘Put Skew’ Persists

The recovery follows a market decline earlier in the week. Market analysts noted that global liquidity tightened as sentiment weakened after the Yearn hack and concerns emerged over potential rate increase signals.

Nearly $1 billion in liquidations occurred within 24 hours, including $400 million in Bitcoin and $240 million in Ethereum perpetuals.

Analysts stated that volatility increased and skew fell as traders expanded their downside hedges. Options positioning around the December 26 expiry has been centered at the $84,000 and $80,000 Bitcoin strikes, levels that imply a “meaningful probability” of BTC starting 2026 below $80,000.