BTC Returns to $93,000, Did the Fed Inject $16 Billion to Rescue the Market?

Original author: 1912212.eth, Foresight News

Since 2019, BTC has never experienced a four-month consecutive decline on the monthly chart. This market anomaly seems to still be holding true. After declining since last October, BTC has been on a downward trend for three consecutive months, dropping to a low near $80,000.

Starting January 1st, Bitcoin's daily chart achieved five consecutive days of gains, even breaking through $93,000 on January 5th. ETH also strongly broke through $3,200. Meme coins like PEPE, BONK, PENGU, and BOME have recently taken turns topping the gainers list.

Coinglass data shows that total liquidations across all exchanges reached $216 million in the past 24 hours, with short liquidations accounting for $168 million.

After remaining depressed for over three months, the Fear & Greed Index today rose to 42, a rare occurrence signaling a return to neutral market sentiment.

Global risk asset markets saw broad gains today, with Japanese and South Korean stock markets leading the rally. South Korea's KOSPI index rose over 2.27% in early trading, surpassing 4,400 points for the first time to hit a record high. Japan's Nikkei 225 index surged over 1,100 points in early trading, coming within 2% of its all-time high. China's A-share market opened with the Shanghai Composite Index up 0.46%, approaching the 4,000-point mark. The Hang Seng Index opened 0.09% higher.

In the US stock market, S&P 500 futures rose 0.46%, Nasdaq futures rose 0.26%, and Dow Jones futures rose 0.58%. Precious metals saw significant gains, with spot gold breaking through $4,420 per ounce, up over 2% in 24 hours, and spot silver breaking through $76 per ounce, surging 4.5%.

Is the altcoin rebound here?

Fed Injects $16 Billion in Liquidity at End of 2025

Crypto assets, led by BTC, are closely tied to global market liquidity. Prices struggle to rise significantly when liquidity is low but can sustain a recovery when liquidity is abundant.

On December 30, 2025, according to Barchart data, the Federal Reserve injected $16 billion into the US banking system via overnight repo operations, marking the second-largest liquidity injection since the COVID-19 pandemic.

This move is often interpreted by the market as a signal of the Fed's support in addressing potential bank liquidity shortages or financial stress. Although the chart shows a recent spike in injections, the overall trend reflects a shift towards more accommodative monetary policy. In the cryptocurrency market, such liquidity injections often stimulate a recovery in risk appetite, as cheap capital tends to flow into high-risk asset classes, driving a rebound in crypto asset prices. Investors may interpret this as the Fed's unwillingness to allow a hard economic landing, thereby boosting market confidence and averting more severe recession risks.

On December 31st, BitMEX co-founder Arthur Hayes stated that crypto market liquidity may have bottomed in November and is slowly recovering, suggesting it's time for cryptocurrencies to start rising.

Danske Bank's FX and Rates Strategist Jens Naervig Pedersen noted in a report that global market liquidity is expected to remain thin this week but may recover next week. The strategist pointed out: "Looking ahead, liquidity should improve next week with more economic data releases." Key data for next week includes important US labor market figures, such as the December Non-Farm Payrolls report and the ISM survey due on January 9th. During the year-end period, many market participants are on holiday or closing positions, typically leading to lower market liquidity.

BTC and ETH Spot ETFs See Large Net Inflows at Start of Year

After months of lackluster performance, Bitcoin spot ETF data showed a net inflow of $355 million on December 30th, followed by another net inflow of $471.14 million on January 2nd.

The magnitude and momentum of this sudden increase in net inflows are relatively significant.

Regarding ETH spot ETFs, net inflows were $67.84 million on December 30th and reached $174.43 million on January 2nd, setting a new high for single-day net inflows since December of last year.

The performance of both ETFs still requires ongoing observation, but the strong net inflows at the start of the year have a notably positive effect on boosting coin prices.

What's Next for the Market?

On January 3rd, JackYi, founder of Liquid Capital, tweeted, "Before the 2026 bull market, shorts closing early lose a little, those closing later lose big and suffer terribly. Those still bearish in the market now are either all talk or cannon fodder. After over a month of consolidation, the bulls will surely prevail. Pessimists are always right, optimists keep moving forward."

On the same day, 10x Research also published an article hinting at potential structural rebound opportunities in the market. "Beneath the surface of the crypto market, significant shifts are occurring. As Bitcoin dominance begins to recede, our models are detecting key turning signals historically marking a shift from defense to opportunity. This cycle's focus isn't on a single token or narrative, but on the broad, synergistic validation pattern forming between major coins and selected altcoins. Momentum effects, relative performance, and market participation are starting to resonate, a development traders cannot ignore."

10x Research stated that the current environment is not a broad-based rally, nor is it advisable to wait passively. The next phase will test discipline, strategic rules, and active position management more rigorously. Clear risk control will be key to distinguishing profitable players from market noise. While most investors wait for headlines to guide direction, traders should focus on market structure and signal validation.

Analysts from the blockchain analytics platform Santiment noted that sentiment among crypto market participants on social media has been strong at the start of the year but warned that further market upside depends on whether retail investors can remain rational. "We need retail to maintain a certain level of caution, a certain level of pessimism, and a certain level of impatience," Santiment analyst Brian Quinlivan said in a YouTube video published on Saturday. Although other crypto sentiment indicators show fear among market participants, Quinlivan said Santiment's social media data points in the opposite direction. "The sentiment is very positive right now," he said, "That's usually a bit concerning, but this time it might just be a normal rebound after the holidays." Quinlivan stated he isn't overly worried about "a huge wave of FOMO coming in," but added that such sentiment could flood the market if Bitcoin quickly climbs to $92,000.

On January 5th, Matrixport tweeted, "Starting the new year with lighter positions and lower leverage is often more conducive for the market to complete rebalancing, making price action more likely to return to a natural rhythm. Since the October 2025 highs, nearly $30 billion in leverage corresponding to BTC and ETH futures open interest has been unwound. Entering 2026, positions are lighter, and speculative overheating has significantly cooled. As crowded trades recede, Bitcoin and other crypto asset price action is more likely to return to a fundamental rhythm, opening up upside potential."

However, the data chart also shows some bearish sentiment in the market.

glassnode recently tweeted that the slowdown in capital inflows coincides with long-term holders increasing their loss realization. This dynamic is gradually emerging as BTC price fluctuates within a narrow range. It reflects growing investor fatigue over time, a common feature of prolonged bear market phases.