Tomorrow sees a massive liquidity trap for Bitcoin as the US Treasury is quietly draining $77 billion from bank reserves

Bank reserves fell $77.579 billion on a weekly-average basis last week ending July 29. Days later, the US Treasury borrowing estimate for July through September rose by $68 billion. The overlap puts Bitcoin's liquidity setup under scrutiny. Several forces moved across the Fed's balance sheet, blurring any direct line from Treasury cash to the reserve decline.The US Treasury borrowing estimate released on Aug. 3 puts the end-September cash balance at $950 billion. Against its May 4 baseline, the headline increase is $68 billion. Strip out the $19 billion higher starting balance, and the revision grows to $87 billion, driven mainly by lower projected net cash flows.The measure excludes SOMA auction add-on rollovers and includes financing needed for SOMA redemptions. It tracks net borrowing, while gross issuance follows a different yardstick. The Treasury release covers government financing. Bitcoin enters the picture downstream through the effects on cash and funding markets.The Federal Reserve's H.4.1 release shows weekly-average reserve balances at $2.984570 trillion for the week ended July 29, down from $3.062149 trillion for the week ended July 22. Over the same-dated comparison,...