Recently, the Federal Reserve released 105 billion in overnight liquidity, and the crypto community's reactions have been polarized. Some enthusiastically shout "bullish signal," while others are confused, asking "What does this have to do with my coin price?" As an analyst who has been closely monitoring the market for a long time, I want to clarify the logic behind this move.

Let's start with the basic concepts. Liquidity essentially refers to the amount of funds flowing within the financial system. When the Fed injects liquidity, it is like adding "vitality" to the entire financial system. When there is more money in the system, capital seeking returns will naturally not be satisfied with low-yield assets like bonds and fixed deposits, and will seek higher-yield investment channels—cryptocurrencies fall within this range of options.

But why is this particular injection worth paying special attention to? The key lies in the scale and timing. 105 billion is one of the largest overnight liquidity operations so far this year, and it occurred during a period of increased volatility in the US stock market and abnormal fluctuations in Treasury yields. This indicates that the financial system is already showing signs of stress. The Fed's move is not just routine; it is a substantial risk hedge. The strength of this signal is markedly different from previous instances.

Looking back at historical data over the past five years, a clear pattern emerges: whenever the Fed initiates large-scale short-term liquidity injections, the crypto market tends to experience a significant upward trend afterward. The most straightforward example is the COVID-19 pandemic shock in 2020. After the Fed launched unlimited quantitative easing, Bitcoin rose from below $4,000 to its subsequent all-time high. This is not a coincidence but an inevitable result of a liquidity-rich environment and capital allocation.

Of course, abundant liquidity does not mean automatic easy gains. Short-term market volatility still exists, and choosing which coins to hold and how to manage risks require personal judgment. But from a macro perspective, the environment is indeed moving in a direction that favors asset creation.