The Federal Reserve recently supplied $29.4 billion in liquidity via overnight repo operations, a
surge in Fed repo activity
, sparking renewed debate over a possible shift in policy.
Bitcoin
traders are now anticipating a short squeeze, as increased liquidity and fresh corporate interest in the cryptocurrency converge. Repo usage has reached its highest point in almost five years, highlighting tighter dollar funding and raising doubts about the central bank's ability to keep its restrictive approach as financial pressures mount.
Lorie Logan, President of the Dallas Fed, suggested that the central bank might restart asset purchases if repo rates stay high, referencing the 2019 strategy when liquidity boosts led to extended rallies in risk assets. This has made crypto analysts optimistic about Bitcoin’s prospects, given its tendency to climb when liquidity improves. “Bitcoin typically tracks liquidity cycles,” said BullTheoryio, pointing out that the current repo surge resembles the environment before the 2020 rally that took BTC from $7,000 to $60,000.
Corporate treasuries are also strengthening Bitcoin’s case. Prenetics Global Limited, which
invested $11 million
to acquire 100 BTC, has grown its total to 378 coins valued at $41 million. At the same time,
Strategy Inc's Q3 2025 earnings call
revealed that the company (MSTR), the largest corporate holder of Bitcoin, bought 397 BTC for $45.6 million in October 2025, bringing its total to 641,205 coins worth $69 billion. CEO Michael Saylor has financed these purchases through equity offerings, even as the company’s shares trade below their net asset value (mNAV).
The Fed’s liquidity actions are being reinforced by corporate interest. Steak 'n Shake, after reversing its decision to accept Ether due to criticism from Bitcoin supporters, introduced a
Bitcoin treasury
, giving customers 210 satoshis with each meal. This move, along with the actions of Prenetics and MSTR, highlights Bitcoin’s expanding role as a corporate balance-sheet asset.
Decentralized finance platforms are also adjusting to broader economic shifts.
Uniswap
liquidity providers are updating their approaches, as
Bitget's analysis
indicates, in response to varying corporate liquidity results. Stablecoin pools and cross-chain solutions are being used as safeguards against market swings. As traditional markets face liquidity fragmentation—illustrated by Spirit AeroSystems’ losses and Portland General Electric’s $1 billion cash reserve—DeFi’s efficient use of capital is becoming more appealing.
Experts caution that if the Fed changes course, it could spark a Bitcoin short squeeze, since periods of tight liquidity often lead to forceful central bank actions. Past trends show BTC jumping 20–30% within months after liquidity injections similar to those in 2019. Traders are closely watching on-chain indicators like SRF usage and SOFR rates to anticipate the Fed’s next steps.
