How Bitcoin Liquidity Has Been Affected by the Government Shutdown

Bitcoin has fallen about 19% from its October all-time high due to the U.S. government shutdown, which has withdrawn approximately $700 billion from markets through the Treasury General Account (TGA). The TGA has reached $1 trillion during the shutdown, leading to a liquidity crisis as funds are removed from the private financial system, limiting availability for lending or investment. Analysts at BitMEX believe a strong relief rally could occur when the shutdown ends, injecting hundreds of billions back into the markets, suggesting that Bitcoin's four-year cycle isn't over yet. The significant rise in TGA during the shutdown has caused an increase in overnight repo usage, indicating banks are short on cash. Analysts predict the government will soon resume spending from the TGA, which would likely trigger a bullish response in Bitcoin, coinciding with its historical end-of-year performance. This period of decline has been attributed to both the government shutdown and the general macroeconomic conditions, but the expectation remains that Bitcoin's upward movement will resume when liquidity returns to the market.

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