Michael Burry’s $40B Warning: FED’s T-Bill Buying Spree Signals Trouble Ahead

The Fed just flipped the switch. No taper talk, no gentle unwind—just a straight shot of $40 billion in Treasury bill purchases hitting the market. It's the kind of move that makes traders check the calendar, wondering if the 'transitory' playbook got lost in the mail.

The Liquidity Lifeline

Forget subtlety. This isn't a nudge; it's a shove. The central bank is bypassing its own balance sheet runoff to pump direct cash into the short-term funding markets. The goal? Keep the gears of the financial system greased. The side effect? Another massive injection of liquidity searching for a home—and traditional assets aren't the only destination anymore.

The Digital Asset Angle

When the Fed opens the taps, money flows everywhere. History shows that waves of fresh liquidity don't just lift Treasury prices; they spill over into risk assets. For crypto markets, this kind of macro backdrop has often been rocket fuel. It creates the 'search for yield' environment where digital assets, with their volatility and growth narratives, become irresistible to a chunk of that capital. It's the ultimate financial bypass surgery.

A Cynical Take on the Playbook

Let's be real: this is the central bank's classic 'extend and pretend' maneuver, dressed up as technical market operations. They're solving a plumbing issue today while potentially flooding the basement tomorrow. It's the kind of short-term fix that long-term investors—and skeptics like Burry—watch with a deep, knowing frown.

The warning is clear. The Fed's $40 billion move isn't just a routine operation; it's a signal flare in the financial fog. And in today's interconnected world, when trouble stirs in traditional finance, the ripples are felt on every blockchain.

“The Big Short” legend Michael Burry has issued a dire warning as the U.S. Federal Reserve prepares to buy $40 billion in Treasury bills within 30 days. While the Fed insists this isn’t quantitative easing (QE), Burry argues the move signals a deep liquidity strain in the banking system, one that could spill over into the broader economy and the crypto markets.

A Fragile Banking System Behind the Fed’s $40B T-Bill Push

Fed Chair Jerome Powell disclosed that these purchases are part of “Reserve Management,” but Burry isn’t convinced. He calls it a masked rescue mission for a banking sector still rattled by the 2023 mini-banking crisis. Burry highlights that bank reserves, once at $2.2 trillion pre-crisis, now hover above $3 trillion, yet banks are still showing cracks.

Liquidity Is Quietly Returning

Crypto analyst Lark Davis echoed concerns but focused on what it means for the crypto market. He says the Fed’s T-bill purchases inject liquidity directly into the system: “The money printer is warming up.” He calls this the start of a “stealth QE”, hinting that markets could soon feel the boost.

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Meanwhile, Ash Crypto pointed out a major disconnect:

He highlighted a sharp contrast between traditional markets and Bitcoin. Despite the FOMC announcing three rate cuts for 2025, gold and silver hitting new all-time highs, a $40B Treasury-bill buying spree, gradual QE, and U.S. stocks sitting less than 1% below their ATH, Bitcoin remains 28% below its all-time high. With everything else rallying, he questions whether this gap hints at market manipulation.

Bitcoin Drops Below $90K as Miners Sell

Bitcoin slid over 2%, dropping to $90,252 ahead of options expiry. Analysts like Ted Pillows warn BTC could revisit $85,000, noting its failure to reclaim the $93K–$94K resistance. Support sits in the $88K–$89K zone. Adding pressure, miners are offloading holdings, Marathon Digital dumped 275 BTC worth $25.3 million, according to Lookonchain.

The selling comes as repo market volatility rises, with expectations that the Fed may need even more aggressive liquidity measures to prevent a year-end funding crunch, a scenario Burry sees as further proof of systemic weakness.

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FAQs

Bitcoin remains 28% below its peak due to miner selling, weak liquidity, and fear in the market despite strong macro signals.

Rising repo stress suggests liquidity issues. If it worsens, risk assets like bitcoin may face more downside before recovering.

Yes. Heavy miner selling adds supply pressure. If demand stays weak, Bitcoin may retest support NEAR the $85K–$88K range.