Why the Crypto Market Isn’t Rallying Despite the Fed’s $37 Billion Liquidity Injection

The Federal Reserve has injected an estimated $37 billion into the US banking system since last Friday.

Despite this influx of capital, investor sentiment in cryptocurrency markets has plunged to levels of extreme fear. Major assets are posting sharp declines, and the sector’s total capitalization has slipped 6.11% this month.

Liquidity In, Prices Down: The Fed–Crypto Disconnect Explained

According to the latest data, on November 3, the Federal Reserve carried out an additional $7.75 billion in repo operations. The move came shortly after the Fed added $29.4 billion to the banking system on Friday. 

Federal Repo Agreements. Source: FRED Economic Data

This marked the largest single-day liquidity boost since the dot-com era. In addition, the total liquidity injections have amounted to around $37 billion. 

“This is the biggest money printing event of the last 5 years. The crypto market is about to go parabolic,” Alex Mason wrote.

In addition to Treasuries, the Fed also injected $14.25 billion in liquidity through repo operations backed by mortgage-backed securities that same day.