Bitcoin Struggles with $50K Price Target as Fed Injects $13.5B Overnight Liquidity

Summary:
As Bitcoin attempts to break through the $50,000 level, recent actions by the Federal Reserve (Fed) are injecting significant liquidity into the financial markets. The implications for Bitcoin and other risk assets could be substantial, especially as concerns about monetary policy shift amid global economic uncertainties.

Key Takeaways

The Fed's recent liquidity operations convey a strong signal to the cryptocurrency market, matching lending levels seen during the COVID-19 crisis.
Despite worries regarding Japan's economy, many investors remain optimistic about a potential decline in interest rates.
Analysts caution that Bitcoin might indicate a broader trend toward risk-asset “reversion.”

Bitcoin Struggles with $50K Price Target as Fed Injects $13.5B Overnight Liquidity

Fed Repo Activity Surpasses Dot-Com Bubble Era

Recent data shared by analytics platform Barchart reveals that the latest round of quantitative tightening (QT) by the Fed is coming to an end. This shift allows Bitcoin and other risk assets to benefit from a renewed influx of liquidity as the Fed ceases its balance sheet reduction this month.

The latest reports on overnight repurchase, or repo, transactions, indicate that the banking system saw an influx of $13.5 billion on Tuesday. This figure stands as the second-largest overnight tally since the COVID-19 pandemic triggered a global market downturn. Analysts noted, “Probably Fine, carry on,” highlighting that the sum even exceeded amounts recorded during the peak of the dot-com bubble.

Fed overnight repo transactions. Source: Federal Reserve

This liquidity boost comes at a critical point for central banks, particularly as global easing measures have been in place throughout 2025. As Cointelegraph has reported, concerns surrounding Japan’s financial health have led to speculation that the country’s central bank may tighten conditions later this month.

Source: CME Group FedWatch Tool

In contrast, the markets anticipate that the Fed will lower interest rates during its upcoming meeting on December 10, a move that could significantly impact liquidity for risk assets. "December is historically a robust month for the markets, and momentum is building," noted the trading resource The Kobeissi Letter regarding U.S. stocks.

S&P 500 monthly gains data. Source: The Kobeissi Letter/X

Bitcoin's Potential Downturn in Risk Assets

Though optimism surrounding equities remains due to the gains observed in 2025, the cryptocurrency market is exhibiting a distinct bearish trend.

Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, suggests that this could foretell trouble ahead for risk assets, with Bitcoin at the forefront. He stated, “Extreme stock market complacency may suggest further downside in risk-assets, with Bitcoin leading the way.”

McGlone's analysis compares Bitcoin valuations to gold, indicating a possible “reversion” to lower values. Should Bitcoin be valued at around 13 times that of gold, a price of just over $50,000 could be anticipated. According to Bloomberg Economics’ model, at approximately 20x on December 1, the Bitcoin-to-gold fair value is closer to 13x, which is influenced by the S&P 500's 120-day volatility nearing its lowest level since 2017.

Bitcoin versus gold data. Source: Mike McGlone/X