Recently, there's a noteworthy issue worth discussing—the liquidity operation by the Federal Reserve on December 29th, which has sparked various interpretations in the market. Let's first clarify the numbers involved.

The total scale of that operation was $25.95 billion, not the $16 billion often mentioned online. Breaking it down specifically, $16 billion was secured with U.S. Treasury securities, and $9.95 billion was secured with Mortgage-Backed Securities (MBS). It may seem like a large figure, but what is the underlying logic?

Essentially, this is the Federal Reserve providing liquidity to stabilize short-term interest rate fluctuations at the end of the year, keeping the federal funds rate within the target range. In simple terms, this is a technical "replenishment" rather than a crisis rescue. There is a fundamental difference between the two.

A particularly critical detail is the size of the Federal Reserve's balance sheet. In April 2022, it reached as high as $9 trillion, but now it has shrunk to $7.6 trillion. In other words, despite this short-term liquidity injection, the overall tightening direction (balance sheet reduction) has not changed. The current market discussion focuses on when to slow down or stop the balance sheet reduction, rather than whether to restart large-scale easing.

What does this mean for the crypto market? Frankly, the direct impact is minimal. Funds flowing from traditional finance into the crypto market go through complex risk preference adjustments and asset allocation processes, not a simple "conduit" relationship. The real factor influencing the crypto market's direction, at present, remains the market’s expectations for the scale and pace of the Federal Reserve's rate cuts next year. Don't be fooled by the short-term operation figures.