Crypto selloff is likely due to US liquidity drought: Analyst

The recent sharp decline across the cryptocurrency market, seeing Bitcoin fall below the crucial $60,000 mark and Ether struggling to maintain key support levels, is being attributed not to immediate regulatory pressures or specific platform fears, but primarily to a macro liquidity crisis in the United States. According to market analysts, the root cause is the ongoing quantitative tightening (QT) by the Federal Reserve. This policy, designed to shrink the Fed’s balance sheet, effectively removes US dollar liquidity from the global financial system. Analysts argue that this liquidity drought is the primary driver creating a severe drag on all risk assets, with highly volatile assets like cryptocurrencies bearing the brunt of the reallocation. The drying up of funding is compounded by attractive high yields in traditional fixed-income markets, making capital allocation away from speculative ventures more appealing. Experts suggest that until the Fed signals a definitive shift in its monetary policy stance—moving away from tightening—the downward pressure on crypto prices is expected to persist, reflecting a systemic macroeconomic issue rather than a failure of crypto fundamentals.

Source: Crypto selloff is likely due to US liquidity drought: Analyst