The Federal Reserve's policy logic has completely fallen apart. On one hand, they claim to be ending quantitative easing, and on the other hand, they are frantically injecting liquidity—on December 22 alone, releasing $6.8 billion in a single day, with nearly $38 billion injected over the past ten days. But strangely, despite so much money entering the market, the crypto and stock markets are behaving as if cursed, showing no vitality.

Wall Street traders privately complain that this operation is simply surreal. The Fed is both flooding the market and draining liquidity at the same time, claiming it's doing reverse repurchase operations to de-leverage. On December 18, the overnight reverse repo scale soared directly to $10.361 billion. It's like transferring money from one hand to the other—purely laughable—spending a ton of money but seeing no market response.

The root of the problem lies in U.S. debt. In the past three months, new debt has increased by $700 billion, which directly pulls liquidity out of the market. Interbank borrowing rates have started to spike, and small and medium-sized enterprises find it difficult to get financing.

Ironically, all the liquidity released by the Fed has flowed into Wall Street. The S&P 500 keeps hitting new highs, gold has surged over 60% this year, while ordinary people's wages have been shrinking for three consecutive months. This is a classic "trickle-down economy"—no matter how much water is above, it can't reach below.

Bitcoin's situation is even worse. It has been oscillating around $86,000 with no clear direction. The market fear index has dropped to 25, indicating extreme fear. On-chain data is even more painful—long-term holders are continuously selling off, with $300 billion worth of dormant Bitcoin reactivating this year, and institutional ETFs have shifted from net inflows to net outflows.

To make matters worse, the Bank of Japan just raised interest rates to 0.75%, the highest in 30 years. Historical patterns suggest that in such a scenario, Bitcoin typically retraces about 15% on average.

But there is still some hope. The market still has $270 billion in stablecoins (including $16 billion in USDT), which serve as a potential ammunition reserve. Plus, the Fed's reverse repo scale has fallen to a relatively low $3.047 billion, indicating that the market is gradually releasing pressure.

However, it must be admitted that this year's Christmas rally is likely saying goodbye to the usual big gains of previous years. The internal policy rift within the Fed has completely broken the old trading rules. The market needs to find a new rhythm.

If you want to position at the bottom, focus on two indicators: changes in the bank reserve ratio and the reverse repo balance. These two data points often provide early signals. Once these stabilize, the opportunity for a rebound will truly arrive. For now, patience is key—don't be fooled by short-term market noise.