Why Did The Fed Inject Massive $29.4B in Liquidity And What Does it Mean For BTC

The Federal Reserve injected $29.4 billion into the banking system to alleviate liquidity concerns, particularly supporting risk assets like bitcoin. This operation, the largest since the 2020 pandemic, was executed through the standing repo facility (SRF) to temporarily enhance cash reserves and stabilize repo rates. While this liquidity increase combats potential market crises, it doesn't equate to a long-term quantitative easing measure. The injection was a short-term response to prevent disruption in short-term funding markets, as bank reserves dipped to $2.8 trillion and repo rates began to rise, reflecting cash scarcity linked to ongoing quantitative tightening and the Treasury’s increased cash reserve at the Fed.

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