Move on Jackson Hole and the fears of inflation. The real driver behind the recent fainting on cryptographic and stock markets is probably the imminent liquidity drain from the general Treasury of the US Treasury (TGA)A current account held in the federal reserve which is ready for significant accumulation.
Bitcoin
Decreed by more than 8% to $ 113,500 since it reached a record greater than $ 124,000 last Thursday, according to Coindesk data. Price for other major tokens such as ether (Eth)XRP and Solana soil (GROUND) have also corrected, causing the larger market lower. The Coindesk 80 index has dropped by 13% since last Thursday.
The bullish momentum was also weakened at Wall Street, where the Nasdaq index, heavy of technology, dropped almost 1.40% to $ 23,384, after reaching a record of $ 23,969 per week.
Most market comments have allocated losses to Wall Street and in the cryptographic markets to the disembodied of investors before the Federal Reserve (Fed) President Jerome Powell’s planned speech at the Jackson Hole event this week. The dominant opinion is that persistent inflation data can prevent Powell from meeting painful expectations of the market.
However, David Duong argues that the main engine of the sale is the fear of an expected TGA recharge drain.
“Jackson Hole and PPI are only apologies so that market players do not cut the risk before the TGA liquidity drain in the US Treasury (~ $ 400B) In the coming weeks. This explains why Bitcoin has lost the trend alongside many action names. But we think that the path seems clearer in September, “said David Duong, head of institutional research in Coinbase.
What is the General Treasury account?
The General Treasury account is the operational account of the American government to the federal reserve, which is used to collect taxes, customs duties, products from the sale of securities and receipts for public debt, while facilitating government payments.
Like our savings bank accounts, the TGA balance fluctuates daily, increasing with receipts and falling with payments.
The treasure generally spends the cash balance during periods of budgetary uncertainty, such as the saga of the ceiling of persistent leaf debt, to ensure that the government respects its obligations. The so-called TGA expenses generally adds to the liquidity of the system, engraving risk assets, such as the beginning of 2023 and the beginning of this year.
The opposite occurs when the treasure seeks to rebuild its balance by issuing more debts than necessary to finance its obligations. This tends to suck the liquidity of the system.
TGA recharge occurs under fragile conditions
The TGA balance has increased from around $ 320 billion to more than $ 500 billion since the end of July, according to the macromicro data source. The search for Alpha believes that the Treasury may have to issue a new debt worth $ 500 to 600 billion in the next two to four months to restore the TGA at healthy levels.
Reconstruction occurs in the context of the fragile conditions that in previous years, according to Delphi Digital.
“Compared to 2023, The Financial System Now Faces Fewer Liquidity Buffers, Tighter Balance Sheet Capacity, and A Diminished Foreign Bid for Treasuries. The structural ability to absorb wide-scale Issance has been weakened across all major channels. If the Federal Reserve Mainters Delays a pivot, The Resulting Mismatch Between Supply and Available request Could Drive Up Funding Rates and Spill Over Into Broaders, Including Crypto, “Marcus Wu, research analyst at Delphi Digital, said in an explanator.
Wu added that the last large -scale reconstruction, which occurred in the second half of 2024, was remunerated by other prolecidity developments such as the 2 dollars in the Fed RRP installations, healthy bank reserves and high foreign demand for debt.
However, these factors have been eroded over time, “leaving the current ripe liquidity environment for disturbances,” noted Wu.
To cut a long history, liquidity constraints pose an important challenge for BTC bulls that seek to design a steep trend until the end of the year.
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