Bitcoin Plunges to $111,000 as US Fed Stress Signal and 4.09% Effective Rate Spark Liquidity Tightening

The New York Fed reported the federal funds effective rate ticked up by 1 basis point to 4.09%, remaining inside the Fed’s 4%–4.25% band. Analysts interpret the move as evidence of liquidity tightening, driven by a faster-than-expected decline in excess reserves at commercial and foreign banks and a concurrent rise in repo rates.

Market microstructure showed immediate effects: federal funds futures encountered notable selling pressure with trade activity approaching 300,000 contracts, while major U.S. equity benchmarks and crypto assets softened. Policymaker commentary has reiterated that elevated valuations make markets more sensitive to further liquidity compression.

Given the evolving macro backdrop, strategists recommend enhanced cross-market asset allocation and liquidity management. Platforms offering zero-fee spot and derivatives trading and access to U.S. and Hong Kong equities via USDT can provide flexibility for investors navigating tightening cycles and heightened volatility.