According to Arthur Hayes, co-founder of the BitMEX cryptocurrency exchange, once the U.S. Treasury reaches its target of filling the General Account (TGA) — the Treasury's bank account — to $850 billion, the cryptocurrency market will enter a "up-only" mode.
Hayes wrote last Friday when the U.S. TGA opening balance surpassed $807 billion: "With the completion of this liquidity consumption, the up-only mode can resume." When the Treasury fills its General Account, the funds are typically isolated and do not flow into the private market.
However, not all analysts believe Hayes' prediction that liquidity will flow into financial markets once the U.S. Treasury reaches its target.
André Dragosch, head of European research at investment firm Bitwise, responded: "However, the correlation between net liquidity and Bitcoin and cryptocurrencies is at best loose. In my view, this is a useless banana."
Many cryptocurrency investors and traders expect that as the Federal Reserve leans towards a rate-cutting cycle, liquidity levels will rise in the coming months, which should push asset prices higher until liquidity runs dry and the tightening rate process begins again.
The U.S. Federal Reserve cut rates by 25 basis points (BPS), or 0.25 percentage points, on Wednesday — the first rate cut since 2024.
Bitcoin (BTC) immediately fell below $115,000 after the rate cut, which is typical of a buy-the-rumor, sell-the-news event.
Nic Puckrin, founder of the education and media company Coin Bureau, warned of a short-term pullback and stated that the market may have already digested this news before the U.S. central bank decided to cut rates.
Federal Reserve Chairman Jerome Powell indicated that there are still disagreements among the Federal Open Market Committee (FOMC) — a rate-setting group composed of 19 officials — regarding further rate cuts in 2025.
However, according to data obtained from the Chicago Mercantile Exchange (CME) Group at the time of writing, 91.9% of traders expect the FOMC to cut rates by as much as 50 basis points at its next meeting in October.
The CME Group is a company that manages major financial derivatives exchanges, including the futures market.
Related: VC Perspective: The Traditional Economy is Being "Eliminated," the Internet Economy is Rising
Original article: “Arthur Hayes: Once the U.S. TGA Reaches $850 Billion Target, Cryptocurrency Will Enter 'Up-Only' Mode”
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