The US Federal Reserve (Fed) injected $40 billion into the market in December as global liquidity reached an all-time high.

On December 30th, the Federal Reserve injected $16 billion in liquidity into the US banking system through overnight repo agreements, marking the second-largest liquidity provision activity since the COVID-19 pandemic. This move increased the total value of Treasury bond purchases via repo in December to $40.32 billion, raising concerns about underlying tensions in the short-term funding market and potential impacts on risk assets like Bitcoin.

According to data from Barchart, this intervention size is only second to emergency measures during the pandemic period. Financial commentator Andrew Lokenauth suggests that this reflects fragility beneath the surface of apparent stability, as banks need cash to manage collateral asset mismatches and related obligations.

While the Fed typically increases repo operations at the end of quarters and years, Bluekurtic Market Insights notes that the sustained demand in December indicates growing reliance on liquidity support, which could be a sign of deeper structural pressures within the system.