The crypto markets are set to shift into “up only” mode once the US Treasury achieves its target of filling the General Account (TGA) with $850 billion, according to Arthur Hayes, co-founder of the BitMEX exchange.
“Once this liquidity drain is complete, the upward momentum can resume,” Hayes deciphered on Friday as the US TGA’s opening balance surpassed $807 billion. When the Treasury is augmenting its General Account, the funds are typically held aside and do not circulate into private markets.
Nonetheless, not all analysts were persuaded by Hayes’ assertion that liquidity would flow into financial markets once the US Treasury met its target.
“Net liquidity shows only a loose correlation to Bitcoin and crypto in general. I view that as a trivial factor,” commented André Dragosch, the European head of research at investment firm Bitwise, retorted.
Many crypto traders are anticipating increasing liquidity levels in the upcoming months as the US Federal Reserve embarks on its interest rate-cutting trajectory, which should elevate asset prices until liquidity diminishes and the rate-tightening process resumes.
Related: Bitcoin investors chasing quick gains may face significant losses: Arthur Hayes
US Federal Reserve cuts rates for the first time in 2025, while investors expect further reductions
The US Federal Reserve enacted a 25 basis point (BPS) interest rate cut on Wednesday — marking the first cut since 2024.
Bitcoin (BTC) fell below $115,000 immediately after the rate cut, reflecting a classic sell-the-news reaction.
Nic Puckrin, founder of the educational and media platform Coin Bureau, cautioned about a short-term retreat and suggested that the markets likely anticipated the cut before the Federal Reserve’s announcement.
Federal Reserve Chairman Jerome Powell noted that the Federal Open Market Committee (FOMC), comprising 19 officials who deliberate on interest rate decisions, remains split on additional rate cuts in 2025.
However, 91.9% of traders expect the FOMC to enact an interest rate cut of up to 50 BPS at the upcoming meeting in October, as stated in data collected at the time of writing from the Chicago Mercantile Exchange (CME) Group.
The CME Group operates major financial derivatives exchanges, including those for futures.
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