Bitcoin could be positioned for a major up-surge as bank reserve balances approach a critical threshold, according to analyst Adam Livingston. Data shows bank cash held at the central bank recently dipped to around $2.93 trillion, a level that Livingston describes as the “danger zone”.
Understanding the Liquidity Pressures
Livingston argues that when bank reserves shrink to such levels, the broader liquidity landscape tightens. He identifies three simultaneous pressures: government cash rebuilding, central bank balance-sheet runoff, and growing currency circulation — all of which reduce systemic cash availability. He describes this setup as a “mother-of-all liquidity pivots” that historically has aligned with strong Bitcoin rallies.
Supply and Demand Dynamics
At the same time, spot Bitcoin exchange-traded funds (ETFs) are absorbing supply, further tightening available float. According to Livingston, scarce supply plus an emerging liquidity pivot creates conditions where Bitcoin’s upside could accelerate sharply.
Key Variables to Watch
Market watchers will now focus on two key variables: whether bank reserves decline further into the red zone and whether central banks signal a shift from quantitative tightening to easing. Should both rise in tandem, Bitcoin may leverage the structural setup for a rally. Conversely, if reserves stabilise or supply loosens, the thesis may lose momentum.
Current Market Sentiment
At present, Bitcoin remains around the $114,000 mark and is showing signs of consolidation rather than an explosive move. Analysts caution that timing remains uncertain but emphasise that the broader macro-financial plumbing merits attention for crypto investors.