Will the Crypto Market Record a Year-End Rally?

The New York Federal Reserve has continued to inject liquidity into the U.S. economy through its overnight repo operations. This marks a positive for the crypto market, which is eyeing a year-end rally even as optimism among crypto traders fades.

New York Fed Pumps $26B Into The Economy as Crypto Market Eyes Rally

New York Fed data show that the U.S. central bank conducted overnight repo operations, injecting $26 billion into the economy. This came through a $16 billion purchase of treasury bills and a $9.95 billion purchase of mortgage-backed securities.

This follows a similar move last week in which the Fed injected $2.5 billion through treasury bills and mortgage-backed securities. This is bullish for the crypto market as it eyes a year-end rally.

Notably, the Bitcoin price had rallied above $90,000 overnight, just as the Fed injected $26 billion into the economy. However, the flagship crypto has since lost all these gains, dropping to as low as $86,700 on the day.

The broader market is also down following Bitcoin’s crash to its intraday low. CoinMarketCap data shows that the total crypto market is at $2.96 trillion, down almost 1% in the last 24 hours.

In the absence of a year-end rally, BTC and other major crypto assets, including Ethereum, XRP, and Solana, risk ending the year in the red. Bitcoin is currently down over 6% year-to-date (YTD). ETH, XRP, and SOL are down 11%, 10%, and 36%, respectively.

Optimism Fades Over A Year-End Rally

Polymarket data shows that optimism is fading for a year-end rally for the crypto market. The odds of a BTC rally to $95,000 has fallen to 3% while the odds of a drop to $80,000 is at 4%, indicating that traders expect the flagship crypto to trade within a tight range till the year ends.

Notably, Bitcoin continues to face significant selling pressure at the $90,000 resistance level. CoinGape reported today that BlackRock deposited 2,201 BTC ($192 million) into Coinbase, likely to offload these coins. The BTC ETFs have continued to register daily net outflows, and have recorded a monthly net outflow of $1.08 billion this December.

Market analyst Ted Pillows noted that BTC’s spot CVD is trending down, suggesting the crypto market is more at risk of a further decline than a year-end rally. He also mentioned that the Coinbase Bitcoin premium has flipped negative, which he also suggested is a cause for concern for market participants.