The US Federal Reserve continues to inject liquidity into the financial system through overnight repurchase operations, a development typically viewed as supportive for risk assets such as cryptocurrencies. However, despite the added liquidity, optimism among crypto traders is fading, and expectations for a strong year-end rally are weakening.
Federal Reserve Adds $26 Billion Through Overnight Repos
According to data released by the Federal Reserve, the central bank injected $26 billion into the US economy via overnight repurchase agreements. The operation consisted of $16 billion in Treasury purchases and $9.95 billion in mortgage-backed securities (MBS).
BREAKING: ?? Fed just pumped $25.95 billion into the economy.
Bullish for markets. pic.twitter.com/Ml59ltITtu
— Ash Crypto (@AshCrypto) December 29, 2025
This move followed a similar action last week, when the Fed added approximately $25 billion through Treasury bills and MBS purchases. Historically, such liquidity injections have been seen as bullish for crypto markets, especially heading into year-end periods.
Bitcoin briefly surged above $90,000 during the overnight operation, coinciding with the Fed’s liquidity injection. However, the rally proved short-lived, with BTC later retreating sharply to an intraday low of around $86,700, erasing all gains.
Crypto Market Pulls Back as Bitcoin Loses Momentum
Bitcoin’s reversal weighed on the broader digital asset market. According to CoinMarketCap data, total crypto market capitalization fell to approximately $2.96 trillion, down nearly 1% over the past 24 hours.
With year-end momentum weakening, major cryptocurrencies risk closing the year in negative territory. Bitcoin is currently down more than 6% year-to-date, while Ethereum (ETH) has declined 11%, XRP is down 10%, and Solana (SOL) has fallen roughly 36% so far this year.
Year-End Rally Optimism Continues to Fade
Market sentiment indicators suggest diminishing confidence in a late-year rebound. Data from Polymarket shows the probability of Bitcoin reaching $95,000 before year-end has dropped to just 3%, while the likelihood of BTC falling to $80,000 stands at 4%. These figures imply expectations of continued range-bound trading rather than a decisive breakout.
$BTC spot CVD is trending down.
Coinbase Bitcoin premium has flipped negative.
This is not looking good. pic.twitter.com/31vXVKdhD3
— Ted (@TedPillows) December 29, 2025
Bitcoin has repeatedly faced strong selling pressure near the $90,000 resistance level, reinforcing cautious sentiment among traders.
Institutional Flows and On-Chain Signals Raise Caution
Adding to bearish signals, BlackRock reportedly transferred 2,201 BTC, worth approximately $192 million, to Coinbase, potentially indicating preparation for a sale. Bitcoin ETFs have continued to register net outflows, with $108 million in net monthly outflows recorded so far in December.
Market analyst Ted Pillows noted that Bitcoin’s spot Cumulative Volume Delta (CVD) is trending lower, a sign that selling pressure may outweigh buying interest. He also highlighted that the Coinbase Bitcoin premium has turned negative, a metric often associated with weakening US-based demand.
Together, these indicators suggest that downside risks currently outweigh the probability of a sustained year-end crypto rally, despite ongoing liquidity support from the Federal Reserve.
