Last night's 11 PM bullish candle, Bitcoin surged nearly 5% in half an hour, and altcoins collectively followed suit. Many are still analyzing technical indicators for reasons? Wake up, the answer is hidden at the conference table across the ocean—the Federal Reserve might be forced to restart the "money printing mode," and smart money has already started to preemptively move.

Let's first talk about what happened. Recently, several major Wall Street banks have been collectively alarmed; giants like Citibank and Bank of America are all shouting "lack of funds." No joke, interbank liquidity has become strained to the limit. Two critical factors overlapped causing the turmoil: on one side, the Fed is aggressively shrinking its balance sheet and draining liquidity, with bank reserves dropping to the lowest in four years, approaching the $3 trillion warning line; on the other side, the Treasury Department is frantically dumping government bonds, forcing big banks to actually spend cash to absorb the bonds, further draining cash from the market. The result is interbank borrowing rates soaring straight up, and the entire liquidity pipeline of the system is nearing its breaking point.

The Fed is now in a very awkward position. Continue to stubbornly fight inflation and maintain balance sheet reduction? That might cause the financial system to collapse first. Reverse course and flood the market with liquidity, restart quantitative easing and bond purchases to rescue the economy? That would be equivalent to admitting the previous tightening policy failed. But the signals are already very clear—the Fed has quietly injected $125 billion into the market over the past five days, the largest move since 2020. Officials have started hinting that "asset purchases may be necessary," in plain language: the printing press is ready to restart.

Thinking back to the large liquidity injection in 2020, Bitcoin surged from $3,800 all the way up to $69,000. Liquidity is the fuel for the crypto market. If the Fed really turns to QE, will history repeat itself?