With the Treasury General Account refill almost done, ‘up only can resume’: Arthur Hayes
Crypto markets have been considerably muted as the U.S. Treasury drained liquidity from the system. But because it approaches finishing its Treasury General Account (TGA) refill, one thing the former BitMEX CEO, Arthur Hayes, called a “liquidity drain,” the “up only” trajectory can get again on observe.
The TGA is principally the authorities’s checking account at the Federal Reserve. When the TGA wants refilling, the Treasury points new debt, successfully pulling liquidity out of the broader monetary system.
In 2025, the Treasury set a refill goal of $850 billion. Hitting that mark meant absorbing a whole bunch of billions in money by promoting Treasury Bills and bonds; money that in any other case may need pumped up inventory and crypto markets as an alternative.
When the authorities’s checking account will get topped off, that cash sits on the sidelines, unavailable for traders, and market liquidity contracts.
Did the TGA refill trigger markets to stall?
Yes, at the very least partially. The TGA refill created a brief liquidity vacuum. Bitcoin fell to round $113,500 after buying and selling above $124,000 earlier in the 12 months. The Nasdaq dropped roughly 1.4% as nicely. This drain synchronized with a pullback throughout most threat belongings, not due to a dramatic change in fundamentals, however merely much less money sloshing round for hypothesis.
Meanwhile, the Federal Reserve introduced its first rate cut of 2025, reducing the Fed funds fee to a variety of 4.00%-4.25%. Markets count on at the very least two extra cuts earlier than 12 months’s finish.
This marks a transparent shift away from two years of tightening, and traditionally, decrease charges have been sturdy gasoline for threat belongings like shares and crypto.
The Fed pointed to a slowing labor market and weakening financial knowledge as key causes for the reduce, signaling that coverage is shifting to help progress once more, even when inflation isn’t absolutely conquered but.
The trillion-dollar firehose for crypto
Perhaps the largest cause for the “up only” thesis: capital is ready. Money market funds have swelled to a document $7.5 trillion as of mid-September 2025; cash that’s been incomes yield in low-risk settings however might be unleashed into shares, bonds, or crypto as quickly as threat appetites return.
When the liquidity tide turns, because it now seems to be doing, that money has the potential to create a ferocious rally.
With the TGA refill largely full, the liquidity drain is ready to reverse. Combine this with a friendlier Federal Reserve and trillions of {dollars} parked on the sidelines prepared to maneuver, and the stage is ready for brand new risk-on momentum.
The liquidity withdrawal is ending, the fee reduce cycle has begun, and the market’s huge money pile is primed to chase yield and upside as soon as extra. Or as Hayes places it, “up only can resume.”
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