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Bitcoin’s near-term path, argues macro commentator Bruce Florian–founder of the Bitcoin Self-Custody Company Schwarzberg and a bestselling author–is being set far from crypto order books and deep inside the US money markets, where a once-enormous pool of excess cash has finally run dry. In a thread on X, Florian frames the Federal Reserve’s overnight reverse repo facility (RRP) as the “surplus pot” that quietly powered asset prices for two years—and now, with that pot empty, he believes markets are about to feel the unfiltered weight of tighter liquidity.
Why This Means Pain For Bitcoin
Florian starts by locating the inflection point: “The reverse repo facility (RRP) is at its lowest level in four years.” He then walks through the basic plumbing. During the pandemic response, “so much money was printed… there were fewer assets than excess cash,” so banks and money funds “parked [it] with the Fed in the RRP. Safe and earning interest.” As that pool drained, it didn’t disappear—it “was continuously pumped into the market over the last few years. Mainly into government bonds.” In his accounting, “around $2 trillion in excess liquidity from 2020/21 flowed into the market over the last 24 months,” keeping valuations buoyant despite higher policy rates and formal quantitative tightening.
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The metaphor he uses is deliberate and evocative: “It’s like a tanker traveling at full speed. Even if you turn off the engine, it will continue to drift for many kilometers,…
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