This news can easily be misinterpreted, but if it is truly understood as "Favourable Information is here", then there is an eighty to ninety percent chance of missing the beat.

On December 22, the Federal Reserve plans to inject about $6.8 billion in liquidity into the market through repurchase agreements. A total of $38 billion has been injected over the past 10 days. The official explanation is summed up in four words: year-end liquidity management.

**To put it directly: this is not quantitative easing, but rather "preventing a stall."**

When many people see "injecting liquidity", their first reaction is that risky assets are going to rise. But you need to distinguish between several completely different concepts:

— QE (Long-term, irreversible)
— Interest rate cut (trend level)
— Buyback Injection (Short-term, must pay back)

The tool used this time is called a repurchase agreement (Repo), characterized by a simple phrase: **Give today, return tomorrow.**

**How does a repurchase agreement work?**

The process is very simple: the Federal Reserve gives cash to banks, and the banks use high-quality assets like U.S. Treasuries as collateral, repaying the money and retrieving the assets after an overnight or very short-term maturity.

Looks like it's about loosening the money supply? Actually, it's not. The purpose is not to stimulate the economy at all, but to **prevent the funding chain from getting "stuck" at critical moments**.

**Why does it have to be the end of the year?**

The end of the year is a high-risk period for the financial system:

**1. Balance Sheet Contraction**. Banks need to prepare year-end reports, and they must reduce their risk exposure, so they are also reluctant to lend to each other. At this time, funds will become tight instantly.

**2. Surge in Collateral Demand**. A large amount of US Treasuries is being utilized, and financial institutions need cash to fill the gap.

At the end of the year, if the Federal Reserve does not inject liquidity, the market is likely to experience a cash crunch—it's not that there is no money, but that good assets are locked up, and when urgent cash is needed, prices must be increased.

**What does it mean for cryptocurrency investors?**

To be honest, this is a neutral and relatively stable signal. What the Federal Reserve is doing is stabilizing, not stimulating. In the short term, it can indeed alleviate cash pressure in the market, but it does not mean that it will bring about a trend-level liquidity easing.

Changing perspective: The Federal Reserve is saying "I will not let the system break the chain", but it is also saying "my current policy stance has not changed". Those who hope to bet on a major market movement based on this will mostly be disappointed.