Today, the US Secured Overnight Financing Rate (SOFR) increased by 18 basis points to 4.22%.
This increase was the largest daily increase in the last year and raised concerns about a liquidity squeeze in financial markets.
Experts believe this surge is driven by the US Treasury’s shift toward short-term borrowing due to the increasing risk of a government shutdown. The Treasury’s increased supply of short-term bonds created a glut in repo markets, pushing up funding costs. This pushed up both repo rates and the SOFR ratio.
The liquidity squeeze triggered selling pressure on risky assets. Bitcoin, in particular, was one of the assets most affected by this development. After falling below $106,000 during the day, Bitcoin has fallen 3.27% in the last 24 hours.
On the altcoin side, Ethereum, Solana, BNB and XRP attracted attention with their prices seeing double-digit declines in the last week.
*This is not investment advice.