TechFlow news, February 11: According to a Cointelegraph report, Bitcoin’s recent price volatility has been driven more by liquidity conditions than by expectations of Federal Reserve rate cuts. Research indicates that although rate cuts were once a key signal for the cryptocurrency market, Bitcoin is now more sensitive to the actual availability of funds within the financial system and to risk capital.
Experts note that interest rates and liquidity are distinct concepts—the former measures the cost of funds, while the latter reflects the volume of funds in circulation. When liquidity is abundant, leverage and risk investment expand, pushing up Bitcoin’s price; when liquidity tightens, leverage contracts rapidly, often causing equities and commodities to fall in tandem.
Federal Reserve balance sheet policy, U.S. Treasury cash management, and money market instruments directly shape liquidity—and their impact on Bitcoin outweighs that of minor adjustments to policy interest rates. Analysts now focus more on whether systemic liquidity is sufficient to sustain risk investment, rather than solely on the direction of interest rates.
