Markets have entered a period of sharp volatility again as the price of Bitcoin (BTC) has fallen below $99,000. Chart showing the decline in BTC price. Commenting on the decline, Ark Invest CEO Cathie Wood stated that global liquidity conditions are rapidly deteriorating and this is putting serious pressure on the markets. Wood summarized the current situation by saying, “Markets are facing a liquidity squeeze.” According to the CEO, both the tight monetary policy stance and the US Treasury Department's cash hoarding efforts are simultaneously squeezing liquidity in the financial system, triggering sharp fluctuations in risky assets. Wood described the Fed's confirmation that its balance sheet reduction program will continue until December 1, 2025, as a critical item. He argued that the Fed's quantitative tightening has pushed SOFR, a key indicator in the overnight funding market, above the policy rate, signaling stress in money markets. He also noted that even as inflation has declined and the labor market has begun to weaken, FOMC members' shift away from the possibility of a rate cut in December has increased uncertainty. Related News: Developers Take Action on Altcoin with Major Price Drop: They're Initiating Buybacks Ark Invest's CEO stated that the continued contraction of the Fed's balance sheet has tightened financial conditions, reducing risk appetite and putting pressure on markets. He also noted that the US Treasury Department's continued borrowing and increasing cash reserves despite the government shutdown is draining liquidity from the market. According to Wood, these three main factors – tight monetary policy, ongoing balance sheet reductions, and the Treasury's increasing demand for cash – are combining to make short-term market volatility and potential disruption inevitable. *This is not investment advice. Continue Reading: Why Is Bitcoin’s Price Falling? It Even Dropped Below $99,000 – Big Bull Cathie Wood Explains
