The Fed has quietly turned on the Faucet, and it's flowing more vigorously than many people imagined.

In the past month, the Fed injected nearly $49 billion of liquidity into the market through a series of operations. One day's injection even set a five-year record for the highest single-day amount. The significance of this action is not just the number itself—it marks the start of the largest and fastest liquidity release cycle since the pandemic crisis of 2020. The festive season for asset markets may really be approaching.

This is not an isolated policy adjustment, but a complete set of directional changes. First, it is the cessation of "Faucet". Starting from December 1, the Fed officially halted the balance sheet reduction process, which means that the $60 billion that was originally to be withdrawn from the market each month will remain in the system. At least the faucet is no longer drawing out.

Next is the active "Faucet". The Fed began large-scale short-term repurchase operations, injecting as much as $29.4 billion in a single day. The market widely expects that this may just be a prelude to the real quantitative easing ( QE ). In other words, it's not just about not withdrawing funds anymore; now they are actively pouring money in.

The more exaggerated part is yet to come. After the government reopens, the U.S. Treasury is expected to release hundreds of billions of dollars in "invisible QE" funds to the market. This is the real liquidity flood.

The CEO of Ark Invest, Cathie Wood, recently made a direct statement: "The stage of liquidity exhaustion is over, and the market's faucet has reopened." This statement almost represents the current market consensus—that the core fuel driving the cryptocurrency cycle, which is liquidity, has strongly returned.

So what does this mean for the cryptocurrency market? History is always unsettlingly similar. When the Fed ended its balance sheet reduction in 2019, it coincided with the start of a big cycle for Bitcoin and altcoins. The current environment is almost identical to that time, except this time the volume is larger and the speed is faster.

If 2019 was a warm-up, then this time it might be full throttle. The return of liquidity often accompanies a revaluation of risk assets, and the crypto market, being one of the areas most sensitive to global liquidity, usually reacts astonishingly fast. Historically, every time the Fed shifts its policy from tightening to easing, it opens a new upward window for digital assets.

Of course, the market is never one-sided. But at least from the current signals, the fuel tank of the bull market engine is being rapidly filled. The next few months could be very interesting.