The post Why Did The Fed Inject Massive $29.4B in Liquidity And What Does it Mean For BTC appeared on BitcoinEthereumNews.com.

The U.S. Federal Reserve (Fed) pumped $29.4 billion into the banking system on Friday, sparking optimism on crypto social media. While the move aimed at easing liquidity concerns and is supportive of risk assets, including bitcoin, it’s nothing out of the ordinary. The Fed pumped billions through overnight repo operations, the largest since the 2020 coronavirus pandemic, to ease liquidity stress that has supposedly capped bitcoin’s BTC$107,932.66 gains in recent weeks. The operation, conducted via the standing repo facility (SRF), temporarily boosted cash available with primary dealers and banks and aimed at adding short-term liquidity into the system, lowering repo rates back toward normal levels, preventing a sudden freeze in short-term funding markets, and giving banks breathing room to manage reserves while the Fed monitors the situation. All this sounds too technical, so let’s break it down to understand how the repo, bank reserves, and the Fed’s latest action are related. The repo The repo, or repurchase agreement, is a short-term loan made overnight between two parties — one with idle cash in a bank deposit who wants to generate yield from it, and the other party looking for a cash loan against valuable collateral, such as U.S. Treasury securities and bills. The two parties agree on an interest rate, and the cash is loaned overnight with the promise to buy back the asset on the following day. The lenders in these transactions are typically large money managers, such as money market funds. Bank reserves The repo deals affect the bank’s reserves. As the lender transfers cash to the borrower, the reserves at the lender’s bank decrease, while those at the borrower’s bank increase. An individual bank is vulnerable to strain if many of its accounts lend money to borrowers at other banks. Banks need sufficient reserves to meet regulatory…

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Filed under: News - @ November 3, 2025 5:27 am