Federal liquidity increase could boost Bitcoin amid debt ceiling constraints

exchange685 days ago

0 3 1 minute read

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 (Soure: Cauê Oliveira) — 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.

Analyst

Liam ‘Akiba’ Wright

Editor-in-Chief at CryptoSlate

Also known as “Akiba,” Liam Wright is a reporter, podcast producer, and Editor-in-Chief at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.

Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.