Crypto Market Eyes Year-End Rally as Fed Liquidity Injection and Bitcoin ETF Inflows Boost Sentiment

The crypto market is showing renewed signs of strength as it heads into the final days before 2026, supported by a major liquidity injection from the U.S. Federal Reserve and a reversal in Bitcoin ETF flows. These developments have improved overall market sentiment and raised expectations for a potential year-end relief rally across digital assets.

The New York Fed conducted its largest overnight repo operations of the year, injecting approximately $74.6 billion into the financial system. This liquidity boost included $31.5 billion in U.S. Treasury bill purchases and $43.1 billion in mortgage-backed securities. The operation marked the third consecutive repo action this week, following injections of $26 billion on December 29 and $3 billion on December 30. Such aggressive liquidity support is widely viewed as bullish for risk assets, including Bitcoin and the broader crypto market.

These injections come at a time when markets have been facing seasonal liquidity pressures due to year-end holidays and tax-loss harvesting. Bitcoin has struggled to maintain upward momentum throughout December, repeatedly failing to break above the $90,000 resistance level. Despite this, analysts believe conditions are improving. Market commentator Ted Pillows noted that the total crypto market capitalization has broken out of its recent downtrend, signaling the possibility of a short-term relief rally.

Additional optimism comes from on-chain data showing that long-term Bitcoin holders have paused selling, potentially easing downside pressure. Although BTC briefly rallied toward $89,000, it retraced following the U.S. market open, likely influenced by continued tax-related selling.

A key bullish catalyst is the return of positive Bitcoin ETF flows. On December 30, spot Bitcoin ETFs recorded a net inflow of $355 million, ending a seven-day streak of outflows. Ethereum ETFs also turned positive, with Grayscale’s ETHE leading the way with $50 million in inflows. If sustained, these inflows could provide strong support for a broader crypto rally.

Finally, analysts are watching the BTC-to-gold ratio closely, as a hold at key support levels could signal capital rotation from gold into Bitcoin, further strengthening the crypto market outlook heading into the new year.