Bitcoin’s price fell 5.54% on Nov. 5, closing at $75,969, even as the Federal Reserve reported a $67.5 billion increase in bank reserve balances for the week ending Nov. 4. The contrast highlights a growing disconnect between traditional dollar liquidity and demand for the leading cryptocurrency, according to CryptoSlate.

BTC / USD
Source: CoinGecko. Prices are indicative.

Fed Reserve Gains

The Fed’s H.4.1 release showed total reserve balances at $2.96 trillion on Nov. 4, up $67.5 billion from Oct. 28. The Treasury General Account fell $79.4 billion to $936.2 billion, indicating that government cash flows were moving into depository institutions. Total Fed assets rose $2.5 billion, partially offsetting the reserve increase.

Stablecoin Contraction

Data from analytics firm DefiLlama indicated that dollar‑pegged stablecoin circulation dropped by more than 5.7 billion units, a 1.91% decline, over the same period. Tether’s USDT accounted for 63.37% of the contraction, shedding 3.65 billion units, while USD Coin (USDC) fell 383 million units, representing 6.64% of the total drop. Other tracked stablecoins combined for a net loss of 1.73 billion units.

Implications for Bitcoin Demand

CryptoSlate noted that higher bank reserves do not automatically translate into crypto buying power; the liquidity must flow into financing and purchases first. The simultaneous shrinkage of stablecoin supply suggests reduced dollar‑denominated crypto liquidity, which may have contributed to the Bitcoin sell‑off. The report cautioned that the timing mismatch between reserve data (Fed’s Wednesday snapshot) and stablecoin metrics (midnight UTC) adds uncertainty to any direct causal link.

What to Watch Next

Analysts will monitor whether the Fed’s reserve growth eventually spurs crypto‑on‑ramp activity, especially if Treasury cash flows reverse. Stablecoin issuers’ redemption patterns and any adjustments to bridge‑accounting could also clarify the supply dynamics. Finally, Bitcoin’s price action in the coming days will test whether the current divergence between traditional liquidity and crypto demand persists.