Federal Reserve’s balance sheet runoff is starting to strain the repo market
Pressure is building inside the Federal Reserve’s funding network as its balance sheet runoff drags on.
According to remarks delivered Thursday by Roberto Perli, who manages the System Open Market Account at the New York Fed, the central bank’s continued effort to unwind its massive securities portfolio is tightening liquidity in the repo market, raising concerns over how short-term interest rates will be managed going forward.
Speaking at an event co-hosted by the New York Fed and Columbia University’s School of International and Public Affairs, Roberto said that as reserves decline from “abundant” to merely “ample,” funding costs in overnight markets are starting to climb.
He explained that the repo market is already showing signs of stress, and this shift means tools like the Standing Repo Facility (SRF) will now play a more active role in interest rate control.
The Federal Reserve began shrinking its debt holdings in June 2022. But in April 2025, policymakers decided to ease up on how much they let run off. They lowered the monthly cap on maturing Treasuries from $25 billion to $5 billion, but kept the limit for mortgage-backed securities steady at $35 billion.
The adjustment reflects rising sensitivity in short-term markets as liquidity becomes harder to maintain. Despite the tightening trend, cash parked at the Federal Reserve by commercial banks actually climbed to $3.24 trillion for the week ending May 14.
That’s up from $3 trillion the week before, and just slightly below where balances stood when the Fed first launched its quantitative tightening program. Wall Street analysts believe that to avoid systemic liquidity stress, that figure must stay above $3 trillion to $3.25 trillion.
Roberto noted that the rise in repo rates isn’t inherently alarming, saying, “It represents a normalization of liquidity conditions and is not a cause for concern.” But he also admitted the trend will increase the importance of the SRF in the coming months, stating, “In the future the SRF is likely to be more important for rate control than it has been in the recent past.”
The SRF allows eligible banks and primary dealers to borrow overnight by offering Treasuries and agency debt in exchange for cash. It was designed to give the Federal Reserve more control over short-term rates without flooding markets with excess reserves. But Roberto admitted the facility is far from perfect.
He said, “The more frictionless the facility is, the more effective it will be, and the lower the reserve buffer needed to account for the uncertainty that is inherent in monetary policy implementation.”
To that end, he revealed that the New York Fed plans to make early-settlement operations a permanent feature in its schedule. These additional operations were already tested in December and March, two periods when repo rates typically spike as banks reduce activity to clean up balance sheets for regulatory reasons.
Even so, the SRF hasn’t seen the kind of participation policymakers would like. Roberto pointed to a list of hurdles preventing firms from using it. Dealers are unable to net the transactions off their own balance sheets, and there’s a lack of clarity around how bids are awarded during operations. Both problems make it more expensive and uncertain for participants.
“These frictions add to the costs that counterparties face when using the facility,” Roberto said. “They generally require private market repo rates to trade materially above the SRF minimum bid rate before using the facility.” He emphasized that these issues were especially obvious during the liquidity crunch in December 2024.
The Federal Reserve isn’t walking away from QT just yet , but the funding strain is real, and officials are watching closely. Roberto’s remarks make one thing clear: the central bank’s efforts to shrink its presence in markets will now rely more heavily on technical tools like the SRF — tools that still have some serious kinks to work out.
Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
Trump Crypto Dinner Update: Here's Everything you Need to Know
In a bold statement during a private dinner event, President Trump told attendees that the U.S. is “dominating” in Bitcoin and crypto, adding, “and we are going to keep it that way.” The declaration was meant to reaffirm his pro-crypto stance—but markets seemed to react with skepticism rather than celebration.
TRUMP coin ( TRUMPUSD ), which has been one of the most volatile meme coins in recent months, plunged shortly after the dinner began, leading many to believe traders were waiting for the perfect moment to short the hype.
TRUMP/USD Price Crash - TradingView
Crypto X (formerly Twitter) was buzzing all evening:
“This Trump dinner is boring lmao, for a top holder I’d expect the room to at least be a bit bigger,” one user posted, hinting at underwhelming event optics.
And Justin Sun, founder of Tron and a frequent crypto-event attendee, tweeted:
“On my way to Trump dinner @GetTrumpMemes” — adding to the anticipation.
But once the event got underway, the tone online shifted. The enthusiasm didn’t match the price action—and TRUMP coin bears took over.
On the 2-hour TRUMP/USD chart , we can see that TRUMP was gaining momentum, peaking around $16.50, just before the event. Then, a clear rejection candle formed (marked with a red arrow), followed by a steep red candle as the price dropped to just above $14, briefly touching the 50-period SMA at $13.82.
TRUMP/USD 2-hours chart - TradingView
This looks like a textbook “sell the news” pattern.
While Trump’s words were bullish for crypto in general, the TRUMP coin selloff shows that meme coin traders still move based on sentiment, hype cycles, and social optics. The market didn’t buy into the “dominance” narrative—at least not this time.
Whether TRUMP coin can recover depends on what comes next: real utility, more strategic endorsements, or just the next viral post. Until then, traders are watching closely—and clearly, they're not afraid to sell the top.
In a bold statement during a private dinner event, President Trump told attendees that the U.S. is “dominating” in Bitcoin and crypto, adding, “and we are going to keep it that way.” The declaration was meant to reaffirm his pro-crypto stance—but markets seemed to react with skepticism rather than celebration.
TRUMP coin ( TRUMPUSD ), which has been one of the most volatile meme coins in recent months, plunged shortly after the dinner began, leading many to believe traders were waiting for the perfect moment to short the hype.
TRUMP/USD Price Crash - TradingView
Crypto X (formerly Twitter) was buzzing all evening:
“This Trump dinner is boring lmao, for a top holder I’d expect the room to at least be a bit bigger,” one user posted, hinting at underwhelming event optics.
And Justin Sun, founder of Tron and a frequent crypto-event attendee, tweeted:
“On my way to Trump dinner @GetTrumpMemes” — adding to the anticipation.
But once the event got underway, the tone online shifted. The enthusiasm didn’t match the price action—and TRUMP coin bears took over.
On the 2-hour TRUMP/USD chart , we can see that TRUMP was gaining momentum, peaking around $16.50, just before the event. Then, a clear rejection candle formed (marked with a red arrow), followed by a steep red candle as the price dropped to just above $14, briefly touching the 50-period SMA at $13.82.
TRUMP/USD 2-hours chart - TradingView
This looks like a textbook “sell the news” pattern.
While Trump’s words were bullish for crypto in general, the TRUMP coin selloff shows that meme coin traders still move based on sentiment, hype cycles, and social optics. The market didn’t buy into the “dominance” narrative—at least not this time.
Whether TRUMP coin can recover depends on what comes next: real utility, more strategic endorsements, or just the next viral post. Until then, traders are watching closely—and clearly, they're not afraid to sell the top.
BREAKING: FIFA Partners With Avalanche to Launch Its Own Blockchain
FIFA has partnered with Avalanche , the high-performance blockchain platform , to develop and deploy its own dedicated Layer-1 blockchain network. The move marks a major step forward in web3 integration within the world of sports and signals FIFA’s intent to lead innovation in digital fan engagement.
This partnership replaces FIFA’s previous collaboration with Algorand and marks a strategic pivot toward more scalable and efficient blockchain solutions—leveraging Avalanche’s impressive 6,500+ transactions per second (TPS) and near-instant finality.
Avalanche’s technical advantages make it an ideal infrastructure partner. With sub-2-second transaction finality and minimal fees, the Avalanche blockchain can seamlessly handle millions of user interactions, a crucial feature for an organisation like FIFA with a global fanbase.
The new blockchain will support web3-powered services, such as collectibles, fan experiences, and potential ticketing applications, all while ensuring fast and low-cost execution across the network.
This announcement shows FIFA doubling down on blockchain after previously launching NFT collections on Algorand. The new network, compatible with the Ethereum Virtual Machine (EVM), gives FIFA and its partners greater flexibility and access to a growing ecosystem of developers and decentralized applications (dApps).
While detailed use cases have yet to be disclosed, the potential applications could include fan loyalty systems, digital identities, and on-chain match data, ushering in a new era of interactive and transparent sports tech.
Following the news, AVAX token trading activity surged, reflecting strong investor sentiment and renewed attention toward Avalanche’s real-world adoption. The partnership with FIFA—a globally recognized sports authority—adds credibility to Avalanche’s scalability claims and broadens its exposure.
AVAX/USD chart in the past 24-hours - TradingView
This deal may trigger a wave of new collaborations between blockchain firms and traditional sports institutions, especially as the demand for scalable, real-time digital infrastructure grows.
The FIFA x Avalanche deal isn’t just a tech upgrade—it’s a signal. A signal that legacy institutions are ready to embrace blockchain beyond hype cycles, and build long-term infrastructure that serves millions of users.
As Avalanche positions itself at the forefront of sports and web3 convergence, other federations, leagues, and event organizers may soon follow suit.
FIFA has partnered with Avalanche , the high-performance blockchain platform , to develop and deploy its own dedicated Layer-1 blockchain network. The move marks a major step forward in web3 integration within the world of sports and signals FIFA’s intent to lead innovation in digital fan engagement.
This partnership replaces FIFA’s previous collaboration with Algorand and marks a strategic pivot toward more scalable and efficient blockchain solutions—leveraging Avalanche’s impressive 6,500+ transactions per second (TPS) and near-instant finality.
Avalanche’s technical advantages make it an ideal infrastructure partner. With sub-2-second transaction finality and minimal fees, the Avalanche blockchain can seamlessly handle millions of user interactions, a crucial feature for an organisation like FIFA with a global fanbase.
The new blockchain will support web3-powered services, such as collectibles, fan experiences, and potential ticketing applications, all while ensuring fast and low-cost execution across the network.
This announcement shows FIFA doubling down on blockchain after previously launching NFT collections on Algorand. The new network, compatible with the Ethereum Virtual Machine (EVM), gives FIFA and its partners greater flexibility and access to a growing ecosystem of developers and decentralized applications (dApps).
While detailed use cases have yet to be disclosed, the potential applications could include fan loyalty systems, digital identities, and on-chain match data, ushering in a new era of interactive and transparent sports tech.
Following the news, AVAX token trading activity surged, reflecting strong investor sentiment and renewed attention toward Avalanche’s real-world adoption. The partnership with FIFA—a globally recognized sports authority—adds credibility to Avalanche’s scalability claims and broadens its exposure.
AVAX/USD chart in the past 24-hours - TradingView
This deal may trigger a wave of new collaborations between blockchain firms and traditional sports institutions, especially as the demand for scalable, real-time digital infrastructure grows.
The FIFA x Avalanche deal isn’t just a tech upgrade—it’s a signal. A signal that legacy institutions are ready to embrace blockchain beyond hype cycles, and build long-term infrastructure that serves millions of users.
As Avalanche positions itself at the forefront of sports and web3 convergence, other federations, leagues, and event organizers may soon follow suit.