Why the Crypto Market Isn’t Rallying Despite the Fed’s $37 Billion Liquidity Injection
Despite the Fed injecting $37 billion in liquidity, crypto markets are declining as extreme fear grips investors due to concurrent reverse repo operations.Summary
The Federal Reserve recently injected an estimated $37 billion into the US banking system through repo operations, the largest boost since the dot-com era, leading some analysts to predict a parabolic crypto rally. However, cryptocurrency markets have reacted negatively, with the total capitalization slipping and the Crypto Fear and Greed Index dropping to "Extreme Fear" (21), its lowest since April 2025. Bitcoin and Ethereum have both seen significant price declines in November. This disconnect is explained by the Fed's simultaneous use of reverse repo operations, which absorbed over $75 billion in liquidity. Reverse repos drain cash from the system by having the Fed borrow from banks and money-market funds, suggesting institutions are parking excess cash safely with the Fed rather than deploying it into riskier assets. This push-and-pull dynamic of liquidity injection and absorption creates uncertainty, explaining why crypto sentiment remains negative despite the headline liquidity boost.
(Source：BeInCrypto)