According to the source, the Federal Reserve injected 29.4 billion dollars into the banking system to ease liquidity concerns, described as the largest add since 2020 and not quantitative easing, and the post notes this supports BTC, source: the source. The Fed can add reserves via repurchase operations and the Standing Repo Facility, which temporarily increase reserves without expanding the balance sheet through asset purchases like QE, source: Federal Reserve SRF and open market operations documentation. Bitcoin has behaved like a high beta risk asset and has shown rising correlation with equities during liquidity cycles, which makes additional dollar liquidity a potential short term tailwind for BTC, source: International Monetary Fund analysis on crypto equity co movement in 2022. Traders should monitor the Federal Reserve H.4.1 weekly release for changes in repos, the Treasury General Account, and the Overnight Reverse Repo Facility because these components drive reserve balances that influence risk sentiment across crypto, source: Federal Reserve H.4.1 Factors Affecting Reserve Balances. If reserve additions persist while RRP usage declines, the setup is near term supportive for BTC, whereas a rebuild of the Treasury General Account or higher front end policy rates would tighten liquidity and weigh on crypto beta, source: Federal Reserve H.4.1 and Federal Reserve FOMC policy communications.

According to Crypto Rover, the Federal Reserve executed a direct liquidity injection by purchasing $20.4 billion in 3-year Treasury notes, marking the largest single-day purchase since 2021 (source: Crypto Rover via Twitter, May 6, 2025). This non-routine operation signals a significant policy shift, increasing market liquidity and potentially weakening the U.S. dollar in the short term. For crypto traders, increased liquidity and a softer dollar environment often correlate with upward momentum in Bitcoin and altcoins, as risk assets become more attractive. Monitoring follow-up actions from the Fed will be crucial for anticipating volatility and capital flows into the cryptocurrency market.