Bitcoin and ether both started the Asian trading day down, with bitcoin down 2.5% to $24,330 and ether down 3.7% to $1,649. 

Everyone is concerned about liquidity, especially in light of record drawdowns from the Treasury General Account during the Covid era, and even more so following the demise of Silicon Valley Bank.

Most recently, something appears to have alarmed the Federal Deposit Insurance Corporation when it replaced $40 billion in money it seized from the TGA, which were originally intended to help reduce market disruptions caused by SVB’s shutdown.

According to Reuters, the TGA had lost approximately $100 billion in the previous week before the FDIC restored its $40 billion.

“The TGA was pulled down during 2023, which aided markets in general, including bitcoin. Yet, in the last five days, the TGA has little to do with bitcoin’s outperformance,” Mark Connors, head of research at 3iQ, wrote in a letter to CoinDesk. “There’s a little more confidence that not only is the bitcoin thesis intact, but it’s been confirmed at a level we’ve never seen before.”

According to Connors, the Fed’s confidence is at stake. “That does not instill confidence when you see the Fed building a bubble, blowing the bubble, and then not knowing which game to play by inflation or stabilizing financial markets,” he concluded.

According to Connors, the bigger issue at hand is rate volatility, and the market despises uncertainty. “That’s significant because rates are used to price every asset on the earth,” he explained. “And when you have uncertainty on interest rates, you have doubt on what everything is worth.”