Analyst Adam Livingston Sees Bitcoin Breakout Ahead as Banking Liquidity Nears Critical Levels
Bitcoin Poised for Upside as Bank Reserves Hit Critical Lows, Says Adam Livingston
Bitcoin (BTC) could be approaching a key turning point as U.S. bank reserves at the Federal Reserve drop to multi-year lows, a trend market analyst Adam Livingston says may set the stage for renewed upside in digital assets.
Bank Reserves Slide Toward “Danger Zone”
On Oct. 25, The Kobeissi Letter, a macro newsletter run by Adam Kobeissi, reported that bank cash at the Fed had fallen to around $2.93 trillion, nearing the lower end of its post-pandemic range.
The newsletter didn’t make a direct Bitcoin forecast but noted that the drop in reserve balances — the deposits banks hold with the Fed — signals tightening liquidity conditions. As reserves shrink, dollar funding becomes scarcer, and short-term market stress tends to rise.
Such liquidity readings, The Kobeissi Letter noted, often influence how the Federal Reserve calibrates balance-sheet policy and approaches quantitative tightening.
Livingston: Liquidity Stress Often Precedes Bitcoin Rallies
Adam Livingston, author of “The Bitcoin Age” and “The Great Harvest,” argues that reserves are now nearing what he calls a “danger threshold” — a level where liquidity scarcity begins to pressure markets and policymakers start paying closer attention.
He links the current tightening to three main factors:
- Treasury cash rebuilds, which absorb private liquidity as new bill issuance rises.
- Quantitative tightening, as the Fed lets bonds mature without replacement.
- Growing Fed liabilities, such as currency in circulation, that consume balance-sheet capacity.
Livingston believes these forces mirror previous liquidity cycles that preceded easing moves — and often coincided with strong Bitcoin performance. He points to 2019’s repo market strain, 2020’s emergency interventions, and the 2023 regional bank turmoil as examples where policy pivots triggered crypto rallies.
“When reserves fall too far, the Fed tends to respond,” Livingston said. “Those inflection points, when tightening gives way to easing, have historically lined up with Bitcoin strength.”
He added that spot Bitcoin ETF demand continues to absorb supply, creating a scarcity backdrop that could magnify any rally if liquidity improves.
“In short,” Livingston said, “tight supply and easier policy have the potential to turn small moves into major surges.”
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