●Fed Reverse Repo balances collapse to near zero from $2T peak
●Exhaustion of RRP removes key liquidity buffer for Treasury issuance
●Future issuance expected to drain bank reserves, impacting liquidity
Delphi Digital reports that the Federal Reserve's Reverse Repo (RRP) balances have collapsed from a peak of over $2 trillion to nearly zero. The RRP facility has served as a critical liquidity buffer for the past year, absorbing Treasury issuance without directly draining bank reserves.
With this buffer now effectively exhausted, analysts warn that future Treasury issuances will likely consume bank reserves directly. This structural shift removes a layer of market protection, potentially tightening liquidity conditions for risk assets, including cryptocurrencies.