The capital market has been quite active recently. A-shares have surged, but Hong Kong stocks haven't followed suit. Bitcoin has taken the lead in a sharp correction, and the Nasdaq has followed suit today. The underlying reasons all point to liquidity.

The Federal Reserve's "safety cushion" of reverse repurchase agreements, known as OnRRPs, has only $40 billion left. They're about to start draining bank reserves, which will suddenly increase the crowding-out effect on the market.

Bank reserves currently stand at $3.3 trillion, including $1 trillion in excess reserves. The market is also facing a net issuance of approximately $300 billion in US Treasury bonds, pushing liquidity from "ample" to "tight."

This is particularly hard on assets requiring liquidity: cryptocurrencies, the Nasdaq, and long-term US bonds.

To change this situation, the Federal Reserve or the Treasury needs to act, otherwise the market trend will continue its correction.

The Federal Reserve is essentially hands-off, with no incentive to increase liquidity. We can only rely on Powell and Jackson for this weekend's announcement. We're thankful Hole did a dovish meeting.

Bessant, on his part, has the will but not the means. The Ministry of Finance's TGA account has just returned to 550 billion. If the market drastically changes, how much can Bessant allocate for bond repurchases?

Of course, Bessant's ability to talk is impressive, so a large-scale crisis is unlikely, but a short-term market correction is inevitable. #加密市场回调