Federal Reserve's Repo Plan vs Bitcoin vs Gold
Recently, the Federal Reserve has indeed taken measures to inject liquidity, mainly to address year-end funding pressures and maintain adequate reserves:
• Initiated Reserve Management Purchases (RMP) in December, with approximately $40 billion in short-term treasury bonds in the first month.
• Conducted approximately $6.8 billion in repurchase operations on December 22 (the first such injection since 2020).
• Removed the daily limit on the standing repo facility to increase flexibility.
These are technical operations aimed at stabilizing the money market, rather than large-scale stimulus.
Market Performance (as of December 27, 2025):
• Gold: Strong rise, with an annual increase of over 70%, recently breaking $4500 per ounce, setting a record high. Primarily driven by geopolitical tensions, inflation expectations, and central bank gold purchases, it has effectively served as a safe haven.
• Bitcoin: Modest performance, currently around $87000-88000, with a slight decline or flat for the year (down from the early-year peak). Although liquidity injections typically benefit risk assets, Bitcoin has not clearly benefited recently, being more affected by stock market correlation and leverage.
Why hasn't this liquidity injection pushed Bitcoin higher as in the past, but instead benefited gold?
• Gold is a more genuine 'safe haven': physical attributes, thousands of years of history, central bank reserve preferences, more stable amid uncertainty (such as geopolitical conflicts).
• Bitcoin is more like a 'risk asset': highly correlated with tech stocks, significantly impacted by ETF capital flows and leverage. Currently, market risk appetite is not high, and Bitcoin has not surged.
• The two are not zero-sum substitutes but have different positions: gold defends against system collapse, while Bitcoin seeks liquidity overflow and growth potential.
Looking ahead at the progress of China-US trade, Federal Reserve policies, and global risk events, both will fluctuate. Investors can diversify their allocations but should be cautious of high volatility and regulatory risks.
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