The sharp rise in liquidity stress in the traditional finance (TradFi) market is raising concerns about the future of Bitcoin (BTC). Recent signs of tension in the US banking system could negatively impact risky assets, including BTC. On Monday, the overnight borrowing rate for securities-backed loans (SOFR) reached 5.4%, matching a six-year high.
This indicates tightening liquidity and issues with short-term borrowing, similar to those observed in September 2019. However, some analysts believe that the rise in SOFR is temporary and will soon subside. “This is a short-term issue for the market,” notes David Brickell of FRNT Financial. In the long run, the Federal Reserve is likely to resume liquidity injections, which could once again positively impact BTC.
