The crypto world has fallen again, when can we buy the dip?

The decline since mid-September is fundamentally due to the tightening of liquidity in the U.S. financial markets; if the crypto world wants to stop falling and rebound, we need to see when the liquidity in the financial system will ease.

The Federal Reserve has the following three short-term tools to address market liquidity:

1. Overnight repurchase

The Federal Reserve provides overnight loans to primary dealers by purchasing Treasury securities and other eligible collateral, and recovers the principal and interest the next day.

2. Regularly reserved repurchase convenience SRF

Qualified institutions actively pledge securities to the Federal Reserve for cash when needed.

From the previous post, we can see that after reaching a new high on October 31, the scale of SRF has been gradually decreasing in recent days, which indicates that the tight liquidity situation is easing.

3. The Ministry of Finance's TGA account releases liquidity to the market.

The Ministry of Finance uses its account at the Federal Reserve (TGA) for fiscal spending, and the funds flow into the commercial banking system, increasing reserves.

The previous post also mentioned that during the US government shutdown, the channels through which the Treasury disburses money to the market have been suspended. Once the shutdown ends, the market will immediately receive liquidity relief.

Polymarket predicts that the probability of the U.S. government ending the shutdown between November 8 and November 11 is the highest.

According to the normal process, if the government resumes, the CPI data will be released as usual on November 13th. Based on the CPI data from October 25th, the data is likely to be announced in the direction of the interest rate cut that Trump wants.

So, as long as the U.S. government ends the shutdown before November 13, one can boldly buy the dip, and afterwards the market will trade on the benefits of eased liquidity.

If the suspension ends after the 13th, there will be a data vacuum, and the suspension may last indefinitely, which could lead to panic again and a subsequent fall. However, the extent may not exceed that of before.