Bitcoin reached an impressive high of $126,000 in October 2025, but by December, the cryptocurrency faced a sharp decline, falling over 30% to just above $80,000. A crucial factor behind this downturn appears to be a liquidity indicator developed by the crypto market maker Keyrock.
According to Keyrock, Bitcoin’s performance is significantly influenced by net U.S. Treasury bill issuance, which exhibits a delay in its effect approximately eight months, as shown in their data. As of June 1, 2026, this delayed impulse was recorded at around +$136 billion, a figure that has been on the decline since late 2024. This downward trend aligns closely with a Bitcoin price that was trading above $73,000 at the end of May, framed by intense market fear and notable outflows from spot ETFs.
The Bitcoin saga takes a further intriguing turn with the recent shifts in Federal Reserve policies. In October 2025, the Fed's reserve balances plummeted to $2.8 trillion, marking the lowest point in nearly three years, which corresponded with Bitcoin's initial retreat. The central bank's subsequent response involved resuming Treasury purchases at a rate of approximately $40 billion monthly, which began to taper off in spring 2026.
Keyrock has developed a global liquidity index that incorporates various financial metrics including central bank balance sheets and U.S. bank credit. Their analysis indicates a systematic relationship between these liquidity factors and Bitcoin's price trajectory. The findings suggest that the timing of market responses can often be predicted by understanding the underlying liquidity environment.
Looking forward, all eyes are on the upcoming Consumer Price Index (CPI) data set to be released on July 14, which many traders believe could serve as a pivotal moment in determining Bitcoin's future direction. As the market navigates these complex signals, the impact of Federal Reserve actions remains a critical factor to watch. In related news, the interplay between federal policies and cryptocurrency markets continues to be a topic of deep analysis.
This material is informational and should not be considered financial advice.
