The Federal Reserve has suddenly made a big move. The New York Fed just announced: the repo tool will be normalized, and the $500 billion operation cap has been directly removed. This is not a minor tweak but a complete change of the game rules—opening a door to liquidity for the market.

Why the sudden push at this time? Several reasons have come together.

First, the 2019 liquidity crunch is still fresh in memory. Overnight rates once soared to 10%, causing a lot of fear in the financial sector. This time, the Fed is acting proactively—rather than waiting for a crisis to erupt and then firefighting, it’s closing all liquidity gaps upfront. The message is clear: never let history repeat itself.

Second, Trump’s tariff policies stirred up turbulence in the market. US Treasury yields fluctuated more wildly, and balance sheet reduction (QT) has already started to slow down. Now, by removing the cap, it’s like giving the entire market a reassuring boost. The policy signals are in place, and risk sentiment has naturally returned.

Third, for the crypto space, this is the most direct positive. Highly volatile assets thrive on liquidity. When the Fed opens the liquidity floodgates, the crypto market often feels the warm current first. Historical experience shows that during easing cycles, risk assets are the first to dance.

The trend has truly shifted. The Fed’s message is straightforward: "Enough ammunition, ready to use at any time." From passive response to active defense, the logic of monetary policy has completely reversed. This round of liquidity injection could be a precursor to a new bull market.

How should investors interpret this? Several signals are worth paying close attention to.

First, the stability of the overnight repo rate. As long as this figure doesn’t spike, risk assets will have the confidence to continue rising. It’s a barometer—keeping an eye on it can help anticipate risks early.

Second, beware of inflation’s rebound. Large-scale liquidity injections are long-term energy for inflation to build up. It feels comfortable now, but when inflation kicks in, it will be painful. Don’t focus only on short-term gains; ignore the long-term hidden dangers.

Third, asset allocation should be focused. In a rising tide, not all boats will rise. Projects with solid fundamentals and competitiveness are true safe havens. At this moment, choosing the right sectors and coins requires sharp vision.

Can Bitcoin (BTC) break through psychological barriers? Will the US stock market lead again? Is this liquidity wave the start of a new cycle or the last calm before the storm?

The next phase depends on how long policy continuity and market sentiment can sustain.