TLDR: Bitcoin went from kissing $126K in early October to chilling at ~84K today. That’s a brutal -33% drawdown in six weeks.
Everyone’s yelling about tariffs, geopolitics, or “profit-taking.”
Nah. The real killer was liquidity evaporation — and one chart told the whole story months ago.
The Liquidity Pipe Just Got Turned Off
Remember the Fed’s Overnight Reverse Repo facility (ON RRP)?
That was the parking lot for $2.6 trillion of excess cash from money market funds back in 2022.
Today? It’s basically zero (single-digit billions on most days, occasionally spiking to ~$50–60B at quarter-end).
What happened?
QT drained the system for 3+ years (~$95B/month runoff).
Explosive Treasury bill issuance to fund trillion-dollar deficits gave money funds a better deal — T-bills were yielding 5–20 bps more than the RRP rate.
→ Every new auction sucked cash straight out of the RRP and into fresh T-bills.
Result: The giant liquidity buffer vanished.
Once it hit zero, every new Treasury auction started pulling directly from bank reserves. Repo rates spiked, banks (still nursing ~$400B in unrealized bond losses) got defensive, and the marginal buyer for risk assets disappeared.
Bitcoin felt it hardest. We lost the invisible floor of idle cash that kept everything floating.
The Four Red Flags That Are Still Blinking
This week the macro picture got even spicier:
Core inflation isn’t rolling over as cleanly as hoped → rate-cut path now in question
Markets flipped from “multiple cuts priced in” to “maybe December pause” overnight
QT slowdown isn’t delivering the relief everyone expected yet
DXY curling back above 100 → global dollar squeeze restarting
This combo (sticky inflation + higher-for-longer vibes + stronger dollar) is the exact recipe that keeps the liquidity spigot shut tight.
But Here’s The Good News: The Drain Stops In 9 Days
The Fed already announced it: QT officially ends December 1, 2025.
Balance sheet runoff halts. No more mechanical liquidity bleed.
That alone removes the biggest headwind.
And history shows exactly how Bitcoin gets back to new all-time highs:
Fed pauses QT → flips to reinvestment/QE
(2019 repo crisis & 2020 Covid → BTC +300% each time)Treasury runs down the TGA hard
(Debt-ceiling drama or big stimulus = instant $500–800B liquidity injection)Global easing wave cracks the DXY
(ECB/BOJ/PBOC flood dollars → risk-on everywhere)
We’re literally getting door #1 in nine days.
If reserves stabilize and the Fed moves to even modest reinvestment in Q1/Q2 2026 (extremely likely once repo pressures resurface), the marginal bid comes roaring back.
Bottom Line
Right now? Expect chop and range-bound pain while inflation data decides the next move.
But once new liquidity is confirmed printing — and it will be — $150K+ becomes the base case faster than people think.
The pipe isn’t broken.
It was just turned off for maintenance.
Stay patient, stack accordingly, and watch the inflation prints like your portfolio depends on it (because it does).
Not financial advice — just the macro facts hitting harder than a 30% dip 🥊
See you at the next ATH 🚀
P.S. If you enjoyed this breakdown, forward it to a friend who’s still panic-selling at 84K. They’ll thank you later.
-Nick
Founder, CryptoNuggs