The secured overnight financing rate (SOFR) is a target benchmark rate for dollar-denominated derivatives and loans that replaced LIBOR. https://t.co/08sBVilztg ...

Market Overview - Bitcoin (BTC) has decreased approximately 2% to $108,800, losing momentum from a previous bounce after a crash [1] - Other cryptocurrencies like ether (ETH), XRP, and solana (SOL) have experienced declines of around 3% [1] Precious Metals Performance - Gold has risen by 2% to a new record just below $4,300 per ounce [2] - Silver has increased by 3.6%, also reaching a new record [2] Liquidity Conditions - The tightening liquidity in the financial system is impacting investor risk appetite, contributing to the pressure on Bitcoin and other major tokens [3] - The spread between the secured overnight financing rate (SOFR) and the effective federal funds rate (EFFR) has increased to 0.19 from 0.02 in one week, the highest since December 2024 [4] SOFR and EFFR Insights - SOFR reflects the cost of overnight borrowing using U.S. Treasury securities as collateral, while EFFR indicates the average interest rate for banks lending excess reserves overnight [5][6] - A rising SOFR above EFFR suggests lenders are demanding higher returns for secured borrowing, indicating tight liquidity conditions [7] Funding Stress Indicators - Banks drew $6.75 billion from the standing repo facility (SRF), the highest since the end of the coronavirus pandemic, excluding quarter-end periods [8] - The SRF provides liquidity support during funding shortfalls by offering overnight cash loans against U.S. Treasuries [9] Market Sentiment - There is speculation in crypto social media that central banks may intervene to ease liquidity pressures, potentially reviving bullish sentiment for Bitcoin [9]

Core Insights - The CLO (Collateralized Loan Obligation) market is experiencing significant challenges, referred to as the "CLOpocalypse," due to tightening cash flows following a decline in the secured overnight financing rate (SOFR) [1] Group 1 - CLO funds across various sectors are beginning to deteriorate as their cash flows tighten modestly [1] - The current economic environment is described as uneasy, which is exacerbating the issues faced by CLO funds [1]