Bitcoin Hits $106K as Fed Policy & Shutdown End Fuel Rally

The most concrete development fueling Bitcoin’s rally comes from the Federal Reserve’s communication pivot on reserves and the balance sheet. New York Fed President John Williams signaled last week that with reserves sliding from ‘abundant’ toward merely ‘ample,’ the central bank may soon need to resume asset purchases—not for stimulus, but to maintain smooth money-market functioning. Williams emphasized that any buying would be technical rather than a new quantitative easing program, with quantitative tightening set to stop on December 1 and officials preparing for balance-sheet growth as needed to stabilize reserves.

This shift represents a significant change in the liquidity landscape. As Charles Edwards of Capriole Investments noted on X, ‘Fed confirmed plan to grow balance sheet!’ alongside other bullish indicators. The Fed’s potential return to balance sheet expansion, even for technical reasons, creates the kind of macro backdrop that has historically coincided with stronger crypto demand, particularly when combined with the cessation of quantitative tightening.

Washington politics provides the second major tailwind for Bitcoin’s rally. Prediction markets now show material odds that the record-long US government shutdown will be resolved in mid-November, with Polymarket indicating 87% probability for a resolution between November 12-15. This matters significantly for Bitcoin because when a shutdown ends, Treasury spending typically picks up, causing cash to flow out of the Treasury General Account at the Fed into the banking system and raising bank reserves.

The mechanical linkage—TGA down, reserves up—has been well documented in market analysis. As Yann Allemann and Jan Happel of Glassnode explained, ‘Deal for gov shutdown on the horizon. This will give the Treasury a green light to start draining the TGA. This is a major ingredient for the final up leg to play out.’ This reserve boost, especially with the Fed no longer draining liquidity via quantitative tightening, creates ideal conditions for crypto appreciation.

Fresh policy proposals over the weekend have further stoked what market participants call ‘liquidity imagination.’ President Trump and FHFA leadership floated the idea of permitting 50-year mortgages, a change that would materially reshape US housing finance duration and lower monthly payments at the cost of higher lifetime interest. Additionally, discussions around potential stimulus checks have revived memories of previous liquidity-driven market cycles.

As James Lavish noted on X, ‘Trump is floating $2K stimmy checks, the FHFA is considering 50-year mortgages, and the US government continues to run $2 trillion deficits. Please tell me again how the era of easy liquidity and asset inflation is ending.’ This sentiment was echoed by Joe Consorti, who highlighted the retail impact: ‘Welcome back, helicopter money… had you invested your $1,200 stimulus check in Bitcoin, it’d now be worth $18,607.’

The combination of Federal Reserve balance sheet considerations, potential TGA drawdown from shutdown resolution, and renewed fiscal policy discussions has created a perfect storm for Bitcoin bullishness. At press time, Bitcoin traded at $106,265, reflecting market confidence that these liquidity drivers will continue to support crypto asset appreciation in the coming weeks.