"Bitcoin shows a sign of an imminent surge… bank deposits at lowest since 2023"

Liquidity within the U.S. banking system has reached its limits, leading to forecasts that the price of Bitcoin (BTC) could rise explosively.

On the 27th (local time), CoinDesk reported that virtual-asset market analyst Adam Livingston said, "There are about five weeks left until bank reserves enter the 'danger zone'" and added, "Dollar liquidity is being rapidly depleted, and Bitcoin exchange-traded funds (ETFs) are absorbing the market's Bitcoin supply." He went on to claim, "A large-scale Bitcoin upswing is imminent."

According to the Kobeisi Letter, the cash balance deposited with the Fed by banks has decreased to about $2.93 trillion. That figure is the lowest since 2023, showing that liquidity tightening is proceeding to an extreme degree.

Livingston presented three factors causing liquidity pressure. First, the U.S. Treasury is absorbing private-sector cash by increasing government bond issuance to raise its cash balance. Second, the Federal Reserve is reducing cash in the system by continuing quantitative tightening (QT) — not repurchasing held bonds and allowing maturing holdings to roll off. Third, as the money supply continues to grow, the balances banks can deposit with the central bank are decreasing.

He also explained that whenever this phenomenon repeated, the Fed ultimately sought to stabilize markets by slowing the pace of tightening or re-supplying liquidity. Livingston said, "In 2019's repo market stress, the 2020 pandemic emergency easing, and the 2023 regional bank crisis, Bitcoin rose sharply at each turning point of liquidity provision."

He added again, "With fewer Bitcoins circulating in the market, if liquidity recovers, even small inflows could cause prices to surge," emphasizing, "Bitcoin will once again experience a massive rally."