Core Viewpoint - Bitcoin has not shown signs of stabilization after dropping below $90,000, with a continuous decline from $120,000 attributed to an emerging dollar liquidity crisis [1][2] Group 1: Bitcoin Price and Market Dynamics - Bitcoin's price is viewed as a leading indicator of global dollar liquidity, with the Federal Reserve and the U.S. Treasury being central to this monetary circulation [1] - The primary reason for the recent decline in Bitcoin's price is the Federal Reserve's quantitative tightening (QT) policy, which is expected to extend until early December [1] - The U.S. government's shutdown has led to a significant increase in the TGA Cash account, further draining market liquidity [1] Group 2: Market Sentiment and External Factors - Secondary factors contributing to market confidence issues include the East Asian situation, high leverage in the crypto market, and expectations of a Federal Reserve rate cut in December [2] - The East Asian situation, particularly Japan's new prime minister's strong rhetoric, has introduced some instability in the financial market, but its impact on the digital currency market is limited [2] - The crypto market's leverage has decreased by nearly 45% in recent weeks, from $230 billion to $130 billion, indicating a clearing of excess leverage [2] Group 3: Future Outlook on Liquidity Crisis - Although a liquidity crisis has not fully materialized, the actions of the Federal Reserve and the U.S. Treasury will be crucial moving forward [2] - Key considerations include whether the Federal Reserve will continue to expand its asset reserves and if the Treasury's TGA account will maintain a stable decline [2] - Any stagnation in these "supply" mechanisms could potentially lead to a new round of liquidity crisis [2]

Group 1 - Multiple Wall Street analysts predict that the Federal Reserve may announce the termination of its years-long balance sheet reduction plan at the upcoming meeting at the end of October [2] - Observers note that increasing friction in the money market could impact the achievement of inflation and employment dual targets, indicating a significant turning point for the Quantitative Tightening (QT) policy [2] - Analysts believe that halting QT to stop liquidity withdrawal during the Federal Open Market Committee (FOMC) meeting on October 28-29 would help ensure smooth technical operations of monetary policy [2] Group 2 - The rise in repo rates and the Secured Overnight Financing Rate (SOFR) confirms the existence of market friction [2] - The Federal Funds Rate target, which is the core rate of the Federal Reserve, continues to rise within the 4%-4.25% target range [2] - Federal Reserve Chairman Jerome Powell indicated on October 14 that QT might end in the "coming months," while also stating that the financial system still has ample liquidity [2]

Core Viewpoint - The Federal Reserve, led by Chairman Powell, may end its balance sheet reduction process in the coming months to prevent liquidity issues in short-term funding markets, indicating a potential shift in its quantitative tightening (QT) policy and reinforcing expectations for another rate cut this month [1] Group 1: Federal Reserve's Policy Actions - Powell stated that the Fed's long-term plan is to stop balance sheet reduction when bank reserves are "slightly above adequate levels," which is nearing that point [1] - The Fed has been gradually reducing its holdings of Treasury and mortgage-backed securities since 2022 to withdraw liquidity injected during the pandemic, with a slowdown in the pace of reduction earlier this year [1] - Powell emphasized the importance of paying interest on reserves as a monetary policy tool to maintain control over short-term rates and financial stability [1] Group 2: Economic Outlook - Powell noted that since the September meeting, inflation and employment conditions in the U.S. have not changed significantly, but signs of weakness in the labor market are becoming more apparent [2] - The latest data revisions show a notable slowdown in job growth, increasing the downside risks in the labor market [2] - Due to a government shutdown affecting official economic data, the Fed is relying on unofficial channels to assess economic trends, which poses challenges for policy decisions [2] Group 3: Future Rate Cuts - Most Fed officials currently lean towards a 25 basis point rate cut at the upcoming meeting on October 28-29, with investors expecting this decision to be almost certain [3] - Analysts suggest that Powell's recent remarks aim to set market expectations in advance, indicating that if labor market weakness persists, the Fed may consider more significant easing actions by year-end while remaining flexible and cautious to prevent excessive market speculation on continuous rate cuts [3]