2 Minutes
Liquidity Drain, Not Jackson Hole, Behind Market Weakness
Analysts at Delphi Digital attribute recent weakness in Bitcoin (BTC) and global equities to a roughly $400 billion liquidity drain from a U.S. Treasury account — a structural funding squeeze rather than statements from Jackson Hole. The research note warns that market buffers that helped absorb prior Treasury issuance have thinned, leaving crypto and risk assets vulnerable to funding stress.
Why This Matters for Crypto Traders
Fewer Liquidity Buffers and Tighter Balance Sheets
Delphi Digital’s Marcus Wu explains that compared to 2023 the financial system now has fewer liquidity cushions: weaker balance-sheet capacity at banks, reduced foreign demand for Treasuries, and diminished facilities that previously soaked up excess supply. That combination can push up funding rates and create spillover pressure into crypto markets.
Past Relief Has Faded
The firm notes that a large rebuild of liquidity in late 2024 was supported by a robust Fed RRP program, healthy bank reserves, and strong foreign buying of U.S. debt. Those support mechanisms have eroded over time, making the current environment more susceptible to disruption.
What Traders Should Watch
If the Federal Reserve holds a tighter policy stance or delays easing, the mismatch between Treasury supply and available demand could intensify. That outcome raises downside risk for Bitcoin bulls hoping for a sharp year-end rally — with higher funding rates and cross-asset volatility likely to weigh on crypto sentiment.
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