- Crypto enthusiast explains how liquidity will soon flow into the crypto market.
- He says that moves are in play that will restore bullish sentiment.
- BTC could go on to hit new ATH prices before altseason can commence.
With BTC and ETH prices dropping every day, the CMC Crypto Fear and Greed Index has dropped to an even lower score of 20, marking a high ‘Fear’ sentiment. Today, the price of BTC dipped below $100,000, hititng 5-digit prices, leading analysts to wonder if BTC set a new bottom. As BTC trades in 6-digit prices again, one crypto enthusiast explains how liquidity will soon flow into the crypto market, restoring bullish sentiment.
Crypto Enthusiast Explains How Liquidity Will Soon Flow Into Crypto
A popular research and trading account on X shares interesting observations from a crypto enthusiast. In detail, this post explores how the Fed will have no choice but to start printing money, which will lead to a flood of liquidity pouring back into the crypto market to restore bullish sentiments that could propel the price of BTC to new ATH targets and even trigger the long-awaited altseason peak.
As we can see from the post above, it says that bank liquidity is tightening every week, and the data is starting to look serious. It says that in the last few days, the Fed has quietly started pushing cash into the banking system again. On October 30, it supplied almost $50 billion through repos and on November 3, it added another $23 billion. Repos are short-term loans from the Fed to banks.
Thus, they’re used when banks are short on dollars and need immediate liquidity. When these numbers jump like this, it’s not by accident. It means banks are struggling for cash, and the Fed has to step in so the system doesn’t freeze. At the same time, the SOFR spread has moved up to levels last seen during the Covid crash. SOFR is a key funding rate, when its spread widens, it signals stress in the money markets.
Crypto Market Could See Restored Bullish Sentiment Soon
So here have two clear signs together: banks are borrowing more from the Fed, and funding stress is rising. That tells us that liquidity inside the banking system is continuously tightening. If this continues, the Fed doesn’t have many choices left. It will have to provide some form of liquidity support to the market. Maybe not a massive QE like 2020, but something closer to March 2023, targeted support that calms funding stress and slowly leaks into risk assets.
If bank liquidity keeps tightening, the Fed will have to step in with more support. It might not call it QE, and it might not be trillions, but even a moderate liquidity program is enough to shift the tone for risk assets. In that scenario, funding stress eases, dollars start moving down, equities stabilize and move higher, and Bitcoin, as usual, reacts first inside the risk asset space.
So, the current weakness in crypto is not a sign that the cycle is over. It’s a sign that crypto has already priced in the stress the Fed is now seeing in its own data. Now, every day, the numbers move in the same direction, closer to a point where the Fed has no option left. It has to bring more liquidity back into the market. When that happens, risk-on assets will be the first to benefit, and Bitcoin will be at the front of that line.
