On Monday, liquidity pressure in the U.S. banking system increased, which could have an impact on the market in the short term, CoinDesk reported. David Brickell of FRNT Financial said there are signs of liquidity pressure in the U.S. bank market, which could be bad for risk assets such as Bitcoin (BTC). On Monday, data from the New York branch of the Federal Reserve Bank of the United States showed that the overnight interbank financing rate (SOFR) secured by U.S. Treasury bonds rose to 5.4%, matching the six-year high reached on January 2. The increase is a sign of liquidity tightening and overnight borrowing restrictions, a market dynamic that last appeared in September 2019, after the Federal Reserve injected liquidity into the repo market. Brickell said the Fed eventually needs to end quantitative tightening and restart liquidity injections similar to quantitative easing. He added that the Fed may provide liquidity support again, which could be good for Bitcoin, just as it did after the coronavirus-induced crash in March 2020. Bitcoin has fallen 13% in the past 30 days, decoupling from the continued rise of the Nasdaq.
