Recently, the financial markets are facing dual focal points: the Federal Reserve's reverse repurchase tool has fallen to a five-year low, sounding the alarm for global liquidity; meanwhile, in the cryptocurrency market, HYPE Coin is showing conflicting signals of technical bearishness and fundamental undervaluation, leaving investors in a wait-and-see approach.
Federal Reserve reverse repo falls to a 5-year low, liquidity buffer is in urgent crisis
The Federal Reserve's reverse repurchase tool (RRP) has recently fallen to its lowest level in 1,596 days, signaling that the global market's liquidity 'cushion' is disappearing, raising alarms for both Wall Street and the crypto circle.
The reverse repurchase tool is equivalent to a market 'excess funds reservoir.' The liquidity accumulated over the past few years has supported the market like a 'power source.' But now this 'reservoir' has hit bottom, and experts warn that financial conditions will tighten significantly. Kevin Malone, founder of Malone Wealth, pointed out that the previous cash from the Federal Reserve would offset Treasury issuance pressure, but now it can only rely on private buyers to take over directly, which may push up bond yields and force banks, funds, and other institutions to 'compete fiercely for money.'
Bruce, co-founder of Schwartzberg, linked it to stock markets, bond markets, and Bitcoin risks: 'The excess liquidity of $2 trillion during the pandemic is almost depleted, which is not good news for all asset classes in the short term. If reverse repos continue to dry up, bond yields will rise, and the Federal Reserve may have to step in to inject new liquidity to save the market.' Joseph Brown of Heresy Financial mentioned that the Treasury is still increasing short-term debt issuance, which may add another $1.5 trillion by year-end, betting that interest rate cuts are coming soon, but this feels more like a 'temporary band-aid.'
However, there are also optimistic voices: crypto analyst Quinten believes that after reverse repos reach zero, quantitative easing and money printing may restart, 'at which point Bitcoin could see an explosion.' The current path for the Federal Reserve is narrow, walking on rising financing costs, surging Treasury supply, and market stability, and the next moves could impact bond market volatility, emergency easing, and even Bitcoin trends.
HYPE Coin Signal Mixed: Short-term Bears Dominate, Long-term May Be Undervalued
On the other hand, the cryptocurrency Hyperliquid (#HYPE) has recently shown a mixed signal of long and short positions. From a technical perspective, short-term bears are in control.
In the third quarter, HYPE fluctuated between $36 and $50, and after failing to break the $50 high in mid-August, the bears have taken action, causing the price to drop by 16%.
On the 4-hour chart, both the RSI and OBV indicators show strong bearishness, and the price has fallen below the $42 midpoint. If the daily closing price continues to stay below this level, it may further retrace to the $36 range low, and bears could earn another 16%. Especially if Federal Reserve Chairman Powell takes a hawkish stance at the Jackson Hole seminar, it may exacerbate the decline. From the liquidity distribution perspective, $37.3 and $40 are key support levels, and if broken, shorting sentiment will intensify.
However, long-term buyers may see an opportunity: HYPE's SWPE (Supply-Weighted Profit to Earnings Ratio) indicator is currently at 3.19, which is low for measuring market cap against protocol earnings, coupled with profit-supported buyback plans, a low market cap may indicate strong demand and undervaluation.
In simple terms, HYPE is now somewhat 'split': technically, it is suitable for shorting in the short term, but fundamentally it may be a good time for long-term buying, so investors need to choose a direction based on their risk preference.
