To The Moon

Two charts are now making Wall Street nervous.

Chart 1: SOFR–IORB Spread Soars to 0.32%

What does this mean?

It means the short-term borrowing cost in the market has risen well above the Fed’s target rate.

The last time this happened was during the March 2020 market crash.

Chart 2: Treasury Cash and Liquidity Metrics

Treasury General Account (TGA): surged to $964.8 billion

Overnight Reverse Repo (ON RRP): dropped to $14.1 billion

Bank reserves: fell below $3 trillion

In plain language:

Due to the U.S. government shutdown from a budget deadlock, the Treasury has been aggressively pulling cash from the market, draining liquidity from the entire financial system.

The irony?

The Fed just cut rates by 25 basis points at the end of October —

yet the cost of money went up, not down,

because the Treasury sucked up all available liquidity.

So who’s really running U.S. monetary policy right now?

Not Jerome Powell — it’s Treasury Secretary Bessent.

When liquidity tightens, market jitters are natural.

That’s why we’re seeing sharp price swings lately — especially in assets like Bitcoin.

But here’s where the big reversal could come:

Once the U.S. government reopens,

the Treasury will begin releasing up to nearly $1 trillion in cash back into the system

(actual amount depends on Treasury’s reserve targets).

What happens then?

It could look like another round of “stealth QE,” similar to early 2021:

Massive liquidity floods back into markets

Risk assets surge

Bitcoin and Ethereum , small caps, and non-AI stocks could rally sharply. 

Right now, the fate of the market lies in the hands of the Senate.

If Democrats agree to reopen the government,

the liquidity squeeze could quickly flip into a liquidity surge.

Long-term outlook:

This liquidity boost would be just a temporary painkiller.

America’s huge fiscal deficit remains unresolved,

which means liquidity will eventually tighten again.

At that point, the Fed won’t just “pause balance sheet reduction” —

it will likely be forced to restart full-scale QE and buy assets outright.

That’s the cycle we live in:

Fiscal deficit → Liquidity crisis → Fed forced to print → Asset inflation → Persistent inflation.

Escaping fiat currency isn’t just an investment strategy anymore —

it’s becoming a survival strategy.

Timeline Summary:

Short term (next few weeks):

If the government remains closed, liquidity will keep tightening — expect volatility and possible pullbacks.

Medium term (after reopening):

Up to $1 trillion released → sharp rebound in asset prices.

Long term (after 2026):

Deficit problems return → liquidity or confidence crisis → Fed likely resumes QE.

In short —

choose your leverage timing wisely:

Survive the squeeze to profit from the flood.

We’ve already seen a preview of this cycle back in April.

Sources: MacroMicro, Federal Reserve

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