Fed Injects $2.5B in Overnight Repo as Bitcoin Tests $87K Support

The Federal Reserve Bank of New York executed a $2.5 billion overnight repurchase agreement on December 27, adding to a pattern of liquidity support that has totaled over $120 billion this year. In repo operations, banks exchange high-quality collateral like Treasury securities for short-term cash, with the transaction unwinding the following day.

The frequency of these operations has increased notably in late 2025. While the Fed maintains these are routine interventions to stabilize money markets, the cumulative $120 billion figure exceeds totals from prior years and signals persistent stress in short-term funding markets.

Liquidity conditions have historically correlated with risk asset performance, including cryptocurrencies. Despite the substantial injection, Bitcoin remains range-bound between $86,500 and $90,000. Sellers have failed to push BTC below $86.5K support, while every attempt above $90K has been rejected.

Meanwhile, traditional safe havens are capturing flows. Gold surged to a record $4,540 per ounce on December 26, now up over 70% for 2025 in its best annual performance since 1979. Silver touched $79, and copper hit all-time highs. The divergence suggests that despite abundant liquidity, investors are favoring metals over crypto amid geopolitical uncertainty.

The Fed's next move could prove decisive. Earlier this month, the FOMC cut rates by 25 basis points to a 3.5%-3.75% range and announced plans to resume $40 billion in monthly Treasury purchases. Analysts are monitoring the $90,000 resistance level as a key technical marker. Continued liquidity operations into 2026 may influence broader risk asset sentiment, though outcomes remain uncertain.