Bank reserve balances surged by $67.5 billion between Oct. 28 and Nov. 4, according to the Federal Reserve’s Nov. 5 report. Despite this increase in dollar liquidity, Bitcoin failed to benefit, as stablecoin circulation shrank by over 5.7 billion units, or 1.91%, during the same period. The conflicting signals leave Bitcoin’s recovery uncertain, as higher bank reserves alone do not guarantee increased financing and purchases.
The Federal Reserve’s H.4.1 release showed Nov. 4 reserve balances at $2.96 trillion, while the Treasury General Account dropped $79.4 billion to $936.2 billion. Treasury payments typically boost reserves, but other balance-sheet changes offset part of this effect. Meanwhile, stablecoin contractions were led by Tether’s USDT, which fell by 3.65 billion units, followed by USD Coin’s USDC, which declined by 383 million units.
Bitcoin’s price on Coinbase closed at $75,969.06 on Nov. 5, down 5.54% from $80,428.31 the previous day. This drop followed the release of dated reserve observations, complicating the liquidity-led recovery thesis. Analysts note that while bank reserves and stablecoin supply provide liquidity signals, they do not directly measure Bitcoin demand or buyer identity.
The divergence between rising bank reserves and contracting stablecoin supply leaves the path for Bitcoin’s recovery unclear. Further evidence is needed to link reserve balances with actual financing and buying activity. Until then, the crypto market remains in a state of uncertainty, with liquidity effects and demand observations still pending.