Bitcoin could be set for a big move, author Adam Livingston said, after The Kobeissi Letter noted that bank cash at the Federal Reserve fell to about $2.93 trillion.
The Kobeissi Letter is an independent macro markets newsletter and widely followed X account run by analyst Adam Kobeissi.
In its October 25 post, the newsletter focused on the number itself, not a price forecast for the cryptocurrencies. He noted that the cash banks keep on deposit at the Federal Reserve (often called reserve balances) has been sliding toward the lower end of recent ranges.
In simple terms, that balance is the banking system’s current account at the central bank. When it contracts, dollar liquidity feels tighter and short-term financing may become more sensitive. The point of Kobeissi’s letter was that this reading is important for how the Federal Reserve thinks about its balance sheet and its quantitative tightening.
Livingston is a bitcoin-focused author and market commentator who writes about how liquidity cycles extend to cryptocurrencies. He has published two recent books: “The Age of Bitcoin: Your Guide to the Future of Value, Wealth, and Power” and “The Great Harvest: AI, Work, and the Bitcoin Lifeline,” which establish a framework connecting monetary cycles, scarcity, and digital assets.
He took the same reserve reading and built a thesis around it. In his view, cash levels are approaching what he calls a danger threshold at which shortages begin to take their toll and authorities pay more attention to the functioning of the market.
Livingston’s bonds tighten against three forces that he believes strike at once.
According to Livingston, three forces are squeezing money at the same time.
First, he says, the US Treasury has been rebuilding its cash balance at the Federal Reserve; When the government sells more bills to fill that account, private cash is absorbed and some of it appears as fewer bank reserves.
Second, he says, the Fed is reducing its portfolio through quantitative tightening (allowing bonds to mature without replacement) which also removes cash from the system.
Third, he says, other Fed liabilities, such as currency in circulation, grow over time, taking up space on the balance sheet and leaving less room for bank cash unless policy is adjusted.
That sequence is Livingston’s framework; aligns with how the Fed-Treasury connection works in practice, but the market implications he draws from it are his opinion.
From there, Livingston outlines a sequence that he says he has seen before.
In his view, when cash appears tight and funding markets become nervous, officials tend to slow down balance sheet liquidation or otherwise fend off the stress to keep overnight rates in order. He argues that such inflection points (when liquidity stops tightening and begins to decline) have often aligned with stronger bitcoin performance.
He points to the repo market stress of 2019, the emergency policy easing of 2020, and the regional bank turmoil of 2023, which he says coincided with big bitcoin advances.
Positioning, he adds, is the second pillar.
Livingston says the continued demand for spot bitcoin exchange-traded funds reduces the number of coins available for trading, creating a backdrop of scarcity. He argues that if policy signals change and liquidity improves from a tight starting point, a smaller tradable assets float can help any bullish move travel further.
In simple terms, he says, less available supply and friendlier liquidity can make rallies sharper.
