The Bitcoin Layer LIQUIDITY Explained SIMPLY: How It Really Moves BITCOIN
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Nov 10, 2025 The discussion kicks off with insights on Bitcoin's recent surge linked to potential U.S. government actions. Nik simplifies complex financial concepts using a relatable household balance sheet. He delves into how Treasury spending and bank reserves flow through the system, fueling Bitcoin demand. The intricate connections between government accounts, banks, and asset prices are explored, highlighting the role of liquidity in influencing market dynamics. It's a fascinating breakdown of how everyday finances impact Bitcoin's trajectory.
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Price Moves Often Front‑Run Flows
- Short-term price moves can be front-running of expected flows rather than the actual capital movement.
- Sunday night's Bitcoin rally was a front-running reaction to procedural news, not immediate cash flows.
Use Fiscal Events As Liquidity Signals
- Watch government spending events as leading indicators for deposit growth and asset-buying power.
- Use these flows to anticipate where liquidity may boost Bitcoin and equities in the medium term.
How Government Spending Translates To Deposits
- Government spending lowers the Treasury General Account and increases bank reserves, which then translate into higher deposits for citizens.
- Those extra deposits provide equity that can flow into Bitcoin when people invest surplus cash.