The cryptocurrency market is experiencing a significant liquidity crunch, with total crypto loans reaching a record $73.6 billion in the third quarter of 2025. This marks a 35% increase from previous levels and surpasses the prior peak of $69.4 billion recorded in late 2021. The surge in leverage is attributed to tightening monetary conditions, Treasury General Account (TGA) buildup, and quantitative tightening, which have collectively reduced bank reserves below the $3 trillion mark. Analysts suggest that the recent sell-off in the crypto market is linked to these financial pressures. However, the reopening of the government and increased Treasury spending are anticipated to restore liquidity, potentially benefiting high-beta assets such as Bitcoin.