Last week's move by the Federal Reserve sent ripples through the market. On December 17, the Fed injected $17 billion in liquidity into the market through Reserve Management Purchases (RMPs), which industry insiders interpret as a "stabilization" operation at the end of the year. Immediately following, the announced plan on December 10 to purchase $4 billion in short-term government bonds monthly also surfaced. This plan will last for at least four months, with a total scale exceeding $16 billion.

From a data perspective, this wave of operations was immediately effective—Nasdaq rose by 2.3% on the same day, and the crypto market responded accordingly, with Ethereum up 1.8%. Although Bitcoin is currently consolidating around $87,705, on-chain whale net inflows have just returned to the level of 20,000 coins, but market "risk appetite" is gradually increasing.

More importantly, future expectations are key. According to FedWatch, the probability of interest rate cuts by 2026 has soared to 85%, implying that the federal funds rate could decrease from the current 3.75% to below 3.5%. J.P. Morgan's research team predicts that 2026 will see a historic liquidity peak, with inflation stickiness remaining above 2%, a roughly 70% chance of a soft landing for the economy, but also a 35% risk of recession lurking.

In this environment, capital flows become predictable—based on historical patterns, 60% of the new liquidity will flow into risk assets (Bitcoin and other cryptocurrencies), 30% into bonds, and 10% into MEME-style dark horse assets. Looking back, similar quantitative easing cycles have often led Bitcoin to double in value. During the 2021 cycle, Bitcoin surged from $30,000 to $60,000, a typical example driven by liquidity.

What is the outlook for the current market? In the short term, $88,000 for Bitcoin has become a psychological bottom. A pullback to around $85,000 could be a good entry point. In the medium to long term, the key psychological level of $120,000 appears solid and strong. From a trading perspective, many investors are beginning to allocate between spot assets and RWA-type assets to prepare for the potential liquidity feast in 2026.

Of course, opportunities come with risks. Bank of America predicts that the 10-year US Treasury yield will fluctuate between 4% and 4.25%, and the Fed's rate cuts may proceed gradually over 3-5 rounds. The attractiveness of cash increases during a recession, and the pressure for liquidity to find an exit is mounting—this is precisely the window for early positioning in risk assets.