Quick Breakdown
- U.S. liquidity recovers, with $70B returned and $300B expected, supporting markets and crypto inflows.
- Fed signals potential rate cuts; macro data suggests accommodative policy may be coming.
- Ark Invest positions strategically in crypto-linked equities, anticipating renewed market momentum.
After hitting a multi-year low of $5.56 trillion on October 30, U.S. market liquidity is showing early signs of recovery, a development that could boost crypto markets as investors anticipate renewed capital flows, according to Ark Invest. The six-week federal government shutdown had drained $621 billion from markets, but reopening measures have already returned $70 billion, with an additional $300 billion expected over the next five to six weeks as the Treasury General Account (TGA) normalizes.
— ARK Invest (@ARKInvest) November 26, 2025
Liquidity boost aligns with dovish Fed signals
The improving liquidity backdrop coincides with a softer tone from the Federal Reserve. NY Fed President John Williams, along with Governors Waller and SF Fed President Daly, have signalled support for potential interest rate cuts. Market-implied probabilities now indicate a 90% chance of a near-term reduction. With the TGA still elevated at $892 billion, well above the normalized ~$600 billion, significant liquidity is poised to re-enter financial markets, potentially boosting crypto trading volumes and institutional participation.
Recent macro data support this easing outlook. September jobs data showed unemployment at 4.44%, while ADP reported 13,500 jobs lost the previous week. Soft retail sales and a lower-than-expected core Producer Price Index (PPI) further suggest a more accommodative monetary policy may be on the horizon.
Crypto markets could see renewed momentum
Ark analysts note that returning liquidity, the end of quantitative tightening on December 1, and a dovish Fed signal may create favourable conditions for market reversals. Crypto assets, which often react to U.S. liquidity flows and Fed policy cues, could see increased investor inflows, higher trading activity, and stronger sentiment toward major tokens like Bitcoin (BTC) and Ethereum (ETH).
Ark Invest has already positioned strategically, including a $4.4 million purchase of BitMine shares on September 9, raising its stake to 6.7 million shares valued at $284 million. The firm also holds $193 million in Block stock, underlining its confidence in crypto-linked equities.
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