Bitcoin Eyes Liquidity Race As Fed Injects $29 Billion While China Floods Markets

Core Insights - The Federal Reserve injected $29.4 billion into the US banking system through overnight repo operations, marking the largest single-day move since the dot-com era [1] - China's central bank also executed a record cash infusion to support its domestic banking sector, indicating a global trend towards increased liquidity [1][6] Group 1: Federal Reserve Actions - The Fed's large overnight repo operation reflects growing stress in short-term credit markets, following sharp Treasury sell-offs [2] - This intervention is seen as a response to rising bond yields and expensive funding, aimed at limiting systemic risks [3] - Fed Governor Christopher Waller's call for a potential interest rate cut in December suggests a shift towards a more accommodative monetary policy [3] Group 2: Market Reactions and Expectations - Market expectations for a third rate cut in 2025 have decreased from 90% to 65%, indicating shifting sentiments regarding future monetary policy [4][5] - If the Fed does not meet these expectations, there could be a sharp downturn in markets, as investors have already priced in easier policies [5] Group 3: China's Economic Measures - The People's Bank of China increased liquidity to support economic growth amid softening demand, addressing issues like deflation and a weakened property sector [6]