Recent drops in Bitcoin’s price point to a tightening of U.S. dollar liquidity, according to a new report from ET at SoSoValue (Agarwood Capital). This trend, tied to the growing cash balance at the U.S. Treasury and renewed stress in funding markets, has limited access to dollars, impacting even sensitive assets like Bitcoin. Key Insights:
* **Treasury Cash Build-Up**: The U.S. Treasury General Account (TGA) has reached nearly $1 trillion, reducing cash flow and creating tighter funding conditions.
* **Fed Action**: In response, the Federal Reserve resumed overnight repurchase agreements ($30 billion injected on October 31), marking the first such move since 2019. This intervention aims to ease market tension by directly injecting liquidity into the system.
* **Impact**: Bitcoin’s recent decline coincides with these cash flow changes, which have driven up funding costs and reduced dollar liquidity in the markets.
The report highlights that as soon as the U.S. government reopens and spending begins, we could see a rebound for Bitcoin and other risk assets.
* **Potential Turning Point**: An agreement from Congress on government reopening is anticipated by mid-November. A deal would trigger increased Treasury spending, reducing cash reserves, and returning dollars to markets. This could potentially signal the start of a new market phase for Bitcoin and risk assets as a whole.
**Disclaimer:** This information presents general market commentary and should not be considered investment advice. Always conduct your own research before making any financial decisions.