The Bitcoin Layer America’s Grand Strategy: Repo, China, Jensen Huang, & Bitcoin’s Next Move
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Oct 21, 2025 Nik dives into repo market developments and the Fed's concerns over reserve scarcity. He highlights the geopolitical pivot from LIBOR to SOFR and its impact on money markets. The discussion shifts to America’s reindustrialization strategy, the role of China, and Jensen Huang's views on domestic AI chip production. With liquidity expansion on the horizon, Nik connects these elements to Bitcoin's potential movement, analyzing recent volatility shifts and the importance of support levels. It's a captivating exploration of finance and technology!
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SOFR Spread Reveals Reserve Tightness
- A spike in the SOFR–IORB spread signals banks hoarding reserves and repo-market tightness rather than an acute crisis.
- SOFR matters because it is backed by a $3 trillion overnight treasury-financing market that benchmarks dollar funding.
SOFR Replaced LIBOR With Treasury Collateral
- SOFR replaced LIBOR by anchoring dollar funding to collateralized treasury repo transactions instead of an offshore bank fix.
- That shift ties global dollar credit more directly to U.S. treasury markets and geopolitical policy.
Watch Reserves As A Share Of GDP
- Monitor Fed reserves relative to GDP because the Fed aims to keep that ratio stable to avoid repo scarcity.
- Expect the Fed to add reserves (a QE-like process) if the reserves/GDP ratio threatens functioning of repo markets.