US Government, 500 billion dollars liquidity supply…Bitcoin increase potential grows?
Flow of liquidity supply and withdrawal by the US Treasury shows TGA balance changes (Source: @TomasOnMarkets, X)
Since February, the US Treasury has rapidly increased liquidity in the financial system by releasing large amounts of funds from the Treasury General Account (TGA) into the market. As a result, the market for risky assets, including Bitcoin, is gaining attention again.
Market analyst Thomas explained that recent TGA fund execution has expanded the Federal Reserve's net liquidity to about $6.3 trillion. He stated, "Such liquidity expansion can positively impact Bitcoin prices in the long term."
On January 2, the US government exceeded the debt limit of $36 trillion, sustaining operational funds through so-called 'emergency measures'. However, since February 12, funds have been directly withdrawn from the TGA to continue government activities. The TGA is the government's operational fund account set up at the Federal Reserve and is used for daily fiscal activities like tax collection and public spending. A decrease in this account balance means that funds are moving into the financial market, increasing liquidity.
According to Thomas, since mid-February, the TGA balance has decreased from $842 billion to about $342 billion. Approximately $500 billion has flowed into the market. He forecasted that if this trend continues, the total liquidity supply could exceed $600 billion by the end of April.
However, the ongoing tax filing season may temporarily reduce market liquidity. Nonetheless, he expected liquidity supply to expand again from May. Especially if the debt limit negotiations between the Joe Biden administration and President Trump are delayed until August, net liquidity could soar to a maximum of $6.6 trillion. This may create an environment that strongly pressures Bitcoin upward.
As the connection between federal government fiscal operations and the cryptocurrency market is highlighted once again, investors are likely to react more sensitively to the direction of liquidity flow.