Bitcoin rose 3.61% in 24 hours to $115,520.06, according to CoinMarketCap data. The market capitalization hit $2.3 trillion, while the fully diluted value reached $2.42 trillion. The 24-hour trading volume soared by 82.89% to $47.44 billion, showing renewed investor activity and stronger market participation.
The digital currency started its trading day at about $111,450 and then shot up to over $115,000 by noon. The price action showed strong upward momentum, with very brief periods of consolidation, indicating that buyers remained present throughout the day. The total number of Bitcoins in circulation is now 19.94 million BTC, which is getting nearer to the 21 million limit.
The volume-to-market-cap ratio is 2.09%, indicating good liquidity. Analysts are attributing the situation to institutional inflows and positive investor sentiment resulting from the reduction in macroeconomic uncertainty. Bitcoin’s 24-hour profile score remains at 100%, a sign of strong trading confidence across exchanges.
However, one question remains: considering the tighter liquidity constraints, will Bitcoin's momentum survive as banking reserves further deplete?
Last week, the Federal Reserve reported a $59 billion loss in bank reserves, bringing the total to $2.93 trillion. This development has been reported as the second-lowest oral posture since January 2023, and the third and last month of decline, according to Bloomberg data. The amount is very similar to the 2023 low that was recorded just before the regional banking crisis that hit US financial institutions.
The reduction is attributed to increased US Treasury debt issuance, intended to replenish the government's cash balance after the July increase in the debt ceiling. This step has drawn liquidity out of the banking system, thereby causing a shortage of market funding. The liquidity drain is continuing to pressure the short-term credit markets and tighten financial conditions across the economy.
The evidence supports the claim that the bank reserves have gradually diminished through 2025, with the most significant decreases occurring in September and October. The decline indicates a tightening of the cash supply, which could amplify sensitivity to funding in the banking sector.
In simple terms, bank reserves represent the banking system’s checking account at the Federal Reserve. When balances shrink, dollar liquidity contracts, making funding markets more reactive to minor shocks. The Kobeissi Letter noted that this reading plays a major role in how the Fed views its balance sheet and quantitative tightening policy.
Economists warn that continued reserve depletion could affect short-term funding stability. As liquidity thins, focus now turns to the Federal Reserve’s next policy meeting. Officials will decide whether to continue the ongoing balance sheet reduction program, known as quantitative tightening (QT).
Some analysts propose that the Fed must quickly reconsider its QT policies to avert reserve depletion. A continued decline in reserves could create uncertainty in money markets and negatively affect the entire financial system. The week was marked by both a significant increase in Bitcoin's value and a liquidity squeeze, which brought the Fed's delicate balance between economic growth and stability to the forefront of discussions.
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Bitcoin’s climb past $115,000 reflects renewed market strength as US bank reserves drop below $3 trillion, signaling tight liquidity. With quantitative tightening under review, markets now await the Federal Reserve’s next move amid shifting economic and crypto conditions.