After the Federal Reserve stopped quantitative tightening, bank reserves dropped to sensitive levels, signaling a clear tightening of liquidity.

[Bitpush] The Federal Reserve officially ended its balance sheet reduction on December 1, and this is worth discussing.

Bank reserves have now dropped to a rather sensitive level—in history, this level usually means the market is starting to run short of money. The most direct signal is that the Secured Overnight Financing Rate (SOFR) is periodically testing the upper bound of the policy rate corridor—in plain terms, borrowing costs are being pushed higher. Liquidity in the US banking system is tightening.

Next, the market will be watching how the FOMC manages its balance sheet strategy. According to forecasts, the Reserve Management Purchase (RMP) program may start as early as January 2026, with about $35 billion in Treasuries purchased each month. At this pace, the balance sheet could increase by more than $400 billion in a year.

This will have a significant impact on liquidity expectations across the entire financial market, and the crypto market is no exception.