RegulationMarketsBitcoin
|3 min ReadHow the Fed's $16B "Stealth Stimulus" Ignited a Global Rally
Jax Morales
Senior Analyst
Published
Jan 16, 2026
Since 2019, Bitcoin has never endured four consecutive months of losses. That historical streak held firm this week. After bleeding out from October through December, the crypto market pivoted violently to the upside, with Bitcoin smashing through $93,000 and Ethereum reclaiming $3,200.
But to attribute this rally solely to crypto technicals would be a mistake. This isn't just a Bitcoin pump; it is a global liquidity event.
The Fed's $16 Billion Signal
While market sentiment hit rock bottom in late December, the Federal Reserve was quietly fixing the plumbing behind the scenes. On December 30, 2025, the Fed injected $16 billion into the banking system via overnight repos—the second-largest liquidity injection since the Covid crisis.
This "stealth stimulus" acted as a starting gun for risk assets worldwide. Smart money immediately sniffed out the currency debasement play. It wasn't just Bitcoin that ripped; Gold smashed through $4,420, Silver surged to $76, and South Korea's KOSPI hit an all-time high.
The message from the central bank is clear: they will not allow a liquidity crunch. And in a world of cheap money, hard assets fly.
The Institutional U-Turn
The divergence between retail fear and institutional action has rarely been starker. While social sentiment metrics dragged along the bottom, Wall Street began aggressively buying the dip.
After months of stagnation, Spot ETFs saw a massive reversal. Net inflows hit $355 million on December 30 and accelerated to $471 million by January 2. Even Ethereum, often the laggard, saw its highest single-day inflow in weeks.
The Leverage Flush
Why did the price move so fast? Because the car was light.
According to data from Matrixport, the painful three-month correction from the October highs wiped out nearly $30 billion in leverage. The speculative froth that choked the market is gone. When the Fed's liquidity hit this cleaner, lighter market, the result was explosive: $168 million in shorts were liquidated in 24 hours.
The Verdict: Reflation vs. Fatigue
The "Bear Trap" of Q4 2025 has officially closed. The narrative has shifted from recession fears to the Reflation Trade.
The Bull Case: 10x Research and Arthur Hayes confirm the "liquidity bottom" is in. Momentum is aligning across Bitcoin, commodities, and equities.
The Bear Warning: Glassnode notes that long-term holders are realizing losses, a sign of fatigue. Santiment warns that social sentiment is heating up fast. If BTC stalls at $93k, verify if retail FOMO is outpacing institutional flows.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.