Federal liquidity increase could boost Bitcoin amid debt ceiling constraints
Bitcoin may see movement after liquidity flows from the U.S. Treasury General Account, according to researcher Cauê Oliveira of BlockTrends.
Oliveira explained that the federal government’s inability to issue new debt after the debt ceiling was reinstated at $36 trillion on Jan. 2 requires drawing on the TGA to cover expenses. The balance was $809.3 billion as of Feb. 13 and is projected to decline as obligations are met.
Treasury General Account (Source: Cauê Oliveira)
The process injects liquidity into markets in a manner that resembles quantitative easing while the Federal Reserve continues a quantitative tightening program, reducing its balance sheet by $55 billion per month. This liquidity flow may offset decreases in the Fed’s asset balance and support risk-on assets, including Bitcoin.
Fed Liquidity (Source: Cauê Oliveira)
Oliveira’s analysis indicates that shifts in federal liquidity could soon influence market conditions, though several factors remain in play.
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