How Bitcoin Liquidity Has Been Affected by the Government Shutdown

Bitcoin has fallen approximately 19% from its record high as the U.S. government shutdown has drained around $700 billion from markets, leading to a liquidity crisis. The Treasury General Account (TGA) has increased to $1 trillion during this period, which hinders lending and investment. Analysts from BitMEX anticipate a strong relief rally when the shutdown concludes and liquidity returns to the market, suggesting the current downturn may align with Bitcoin's typical 4-year cycle. Despite experiencing a significant decline, Bitcoin's historical resilience indicates that a recovery may follow the reinstatement of market liquidity as government spending resumes after the shutdown. The situation highlights that BTC's price movement is intertwined with broader economic conditions, with expectations that a renewed influx of capital could coincide with traditional end-of-year market strength. The ongoing trend underscores the volatility associated with Bitcoin and the need for liquidity in financial markets for its price stabilization.

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