Michael Burry Warns of Trouble as FED Starts $40B T-Bill Buying

“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.

“If the U.S. banking system can’t function without $3+ trillion of life support, that’s fragility, not strength,” Burry warned, adding that each crisis forces the Fed to permanently expand its balance sheet.

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.