Bitcoin to Face Inevitable Short Squeeze as Fed Injects $16B in Liquidity, Says Liquid Capital Founder

COINOTAG News reported on December 30 that Liquid Capital founder Daniel Li weighed in on the Fed’s morning liquidity infusion of $16 billion. Li framed the move as part of a gradual expansion of systemic liquidity, noting that past episodes around the COVID shock delivered a subsequent broad rally. He cautioned that this round mirrors prior injections intended to stabilize risk assets, including Bitcoin and ETH, as institutions accumulate and liquidity widens.

With institutional holders continuing to accumulate, the market microstructure could shift, increasing the risk of a short squeeze once prices trend higher. Firms appear positioned to de-leverage and buy the dip, potentially amplifying upside while maintaining prudent risk controls.

Early shorts reportedly incurred mixed outcomes and the dynamic among short sellers has evolved, underscoring a market sensitive to liquidity signals and macro flows in the crypto space.