Analyst: Bitcoin's strength is driven by recovering dollar liquidity

Crypto analyst qinbafrank has attributed Bitcoin's recent outperformance against other assets to a recovery in U.S. dollar liquidity, driven by an increase in U.S. bank reserves. In a post on X, the analyst noted that U.S. bank reserves have gradually increased from $2.96 trillion at the end of last month to $3.037 trillion recently. According to the analyst, bank reserves are the most critical variable for dollar liquidity, and BTC, being highly sensitive to liquidity, appears to be reflecting this change most effectively. In contrast, the U.S. stock market has been relatively sluggish amid geopolitical instability in Iran and concerns over private trust redemptions. The expansion in bank reserves is a result of the U.S. Federal Reserve's Reserve Management Purchases (RMP) plan and reduced spending from the Treasury General Account (TGA). The analyst suggested that future market direction will likely be determined by whether this growth in bank reserves continues.