Recent actions by the Federal Reserve are indeed worth paying attention to. On the surface, they claim to keep the balance sheet reduction and tightening policies unchanged, but in reality, they are continuously injecting liquidity into the market through another channel. What is the underlying logic behind this?

Let's clarify the basic concepts first. Quantitative easing (QE) is actually quite simple—the central bank prints money to buy assets, directly injecting liquidity into the market. Historically, every time QE was implemented, risk assets like stocks and cryptocurrencies experienced significant upward momentum. But this time is different. The Fed has rebranded this tool as "BTFP tool extension and Treasury repurchase optimization." It sounds complicated, but the essence remains the same—buying bonds from financial institutions to indirectly channel funds into the market.

Where is the problem? The key term is "expectation management." The Fed simultaneously sends hawkish signals to fight inflation, making the market believe liquidity will tighten and asset prices will fall; meanwhile, it quietly uses these "invisible tools" to provide liquidity to banks and other institutions, maintaining ample market liquidity. This "tight on the surface, loose behind the scenes" operational logic is quite clear—it can both harvest investors who short-sell based on hawkish signals and avoid public criticism of "stimulating liquidity."

For the crypto market, with Christmas trading approaching, many traders are already gearing up. But in this liquidity cycle, understanding the true intentions behind policies is far more important than blindly following the trend.