The SOFR–EFFR spread is quietly flashing one of the biggest structural warnings since 2019.
Liquidity is tightening fast.
Banks are running low on reserves.
And the system is one shock away from breaking again.
This isn’t noise — it’s a regime change.
🧵 to explain:
Liquidity is tightening fast.
Banks are running low on reserves.
And the system is one shock away from breaking again.
This isn’t noise — it’s a regime change.
🧵 to explain:
But here’s the paradox —
this phase is often bullish for risk assets.
When markets sense the end of QT and start anticipating the return of liquidity (QE, rate cuts, balance sheet expansion), they begin to price in future easing before it happens.
That anticipation phase is historically the most explosive.
this phase is often bullish for risk assets.
When markets sense the end of QT and start anticipating the return of liquidity (QE, rate cuts, balance sheet expansion), they begin to price in future easing before it happens.
That anticipation phase is historically the most explosive.
Bitcoin thrives in that transition — the bridge between tight liquidity and expected easing.
As funding markets strain, liquidity expectations rise.
As expectations rise, capital rotates toward hard, non-sovereign assets.
It’s not the easing itself —
it’s the anticipation of it that lights the fuse.
As funding markets strain, liquidity expectations rise.
As expectations rise, capital rotates toward hard, non-sovereign assets.
It’s not the easing itself —
it’s the anticipation of it that lights the fuse.
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