**Bitcoin Holds Above $100,000 as U.S. Financial Conditions Ease: Will Crypto Rally This Week?**

Bitcoin (BTC $103,389.08) has faced a challenging few weeks, retreating sharply from its record highs and weighing on the broader market, including ether (ETH $3,506.42), XRP ($2.2913), Solana (SOL $160.11), and others. However, there’s a compelling case for the cryptocurrency to stay above the pivotal $100,000 level and potentially rally this week, thanks to a positive shift in the U.S. financial system signaling renewed investor risk appetite.

**Liquidity Conditions Show Signs of Improvement**

At the heart of this story is the spread between the Secured Overnight Financing Rate (SOFR) and the Effective Federal Funds Rate (EFFR), which gauges dollar liquidity conditions in the U.S. banking sector. SOFR is the overnight interest rate that banks pay to borrow cash using Treasuries as collateral, while the EFFR is the rate at which banks lend reserves to each other overnight without collateral.

Typically, the SOFR-EFFR spread remains within a narrow range. However, late last month it surged to its highest level since 2019, suggesting stress and tightening liquidity within the financial system. As a result, the dollar index (DXY)—which tracks the greenback’s value against major fiat currencies—rose, and Bitcoin fell sharply, breaching the $100,000 level at one point.

**Spread Narrows, Signaling Easing Stress**

Over the last couple of days, however, the SOFR-EFFR spread has dropped sharply to 0.05 from 0.35, erasing that earlier spike. This reversal indicates easing financial conditions: the previous “fear premium” has faded, and liquidity is returning to normal. All else being equal, a tighter spread signals looser financial conditions, which are favorable for risk assets like Bitcoin.

As of writing, Bitcoin is on the rise, trading above $103,000 and representing a 1.6% gain on a 24-hour basis, according to CoinDesk data. ETH, XRP, SOL, and BNB have followed BTC’s lead, gaining 1.5% to 2.5%.

**SRF Borrowing Slides, Dollar Index Rally Stalls**

Other key indicators also suggest easing liquidity stress. Banks’ borrowing from the Federal Reserve’s standing repo facility (SRF)—a crucial liquidity management tool—has dropped back to zero after peaking at a record $50 billion earlier this month, according to data from ING. Banks had tapped the SRF in response to temporary funding pressures, but the return to normal levels signals improved stability.

At the same time, the dollar index rally has softened and stalled at resistance from the August high of 100.25. If the DXY sees renewed selling, it could further support Bitcoin’s price, as BTC is seen both as a hedge against dollar debasement and as protection against inflation.

**Outlook: Positive Signs, But Risks Remain**

Taken together, these factors create a compelling case for Bitcoin and the wider crypto market to rally in the coming week. However, there are key risks to monitor:

– **ETF Flows:** Watch for inflows into U.S.-listed spot Bitcoin ETFs, which will need to show strength after nearly $2.8 billion in outflows over the past month.
– **DXY Breakout Risk:** If the dollar index breaks above the key resistance at 100.25, it could dent BTC’s bullish prospects in the short term.

**Conclusion**

The recent normalization in U.S. liquidity conditions and the stalling of the dollar’s rally signal a more favorable environment for Bitcoin and the broader crypto market. While risks remain, especially around ETF flows and the direction of the U.S. dollar, the current setup favors a potential breakout for cryptocurrencies in the coming days.
https://www.coindesk.com/markets/2025/11/09/bitcoin-s-usd100k-question-here-s-why-btc-may-surge-this-week