CRYPTO MARKET BLEED TIED TO US LIQUIDITY CRUNCH

Summary from the TLDR Crypto newsletter

The recent crypto market downturn is occurring because of the US government shutdown, which has lasted 35 days and frozen Treasury spending. The Treasury General Account (TGA), the government's operational fund at the Fed, has ballooned to $1 trillion from $700B, effectively withholding $300B from the economy. This “dam effect” drained banking reserves from $3.2T to $2.8T, tightening liquidity and stressing the repo market. Relief could arrive soon. However, the Fed plans to end quantitative tightening (QT) on December 1, redirecting $40B/month into bank reserves and money markets via Treasury bill rollovers. Once the shutdown ends and QT halts, liquidity should flow back into risk assets, with Bitcoin and Ethereum, historically the most liquidity-sensitive, likely to rebound first.