According to Arthur Hayes, co-founder of Bitmex Crypto Exchange, Crypto Markets enters “UP only” mode once the US Treasury meets its target target of filling out its General Account (TGA), a Treasury bank account, for $850 billion.
“Once this fluid drainage is complete, you can only have a resume,” Hayes wrote Friday. If the Treasury has filled in a general account, the funds will generally be quarantined and do not flow into the private market.
However, not all analysts are confident in Hayes’ predictions that liquidity will flow into financial markets once the US Treasury meets its target.
“Pure liquidity has a loose correlation with Bitcoin and crypto at best, but I think it’s a banana that’s useless in my opinion,” replied Bitwise, director of research at the investment company, Andre Dragosch, Europe.
Many crypto investors and traders are forecasting a rise in liquidity levels in the coming months as the US Federal Reserve is leaning towards an interest rate reduction cycle.
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The US Federal Reserve will cut fees for the first time in 2025, but investors expect more cuts
The US Federal Reserve cut interest rates by 25 basis points (BPS), or a quarter percent, on Wednesday. This is the first interest rate cut since 2024.
Bitcoin (BTC) fell below $115,000 shortly after interest rate cuts in the classic Celthe News event.
Nic Puckrin, founder of the Coin Bureau, an education and media company, warned of short-term pullbacks, saying it was a market pricing cut ahead of the US Central Bank’s decision to cut interest rates.
Federal Reserve Chair Jerome Powell said the Federal Open Market Committee (FOMC), a group of 19 officials considering a rate decision, remains split into additional interest rate cuts in 2025.
However, 91.9% of traders expect FOMC to cut interest rates by up to 50 bps at the next meeting in October, according to data obtained at the time of this writing from the Chicago Mercantile Exchange (CME) group.
CME Group is a company that manages major financial derivative exchanges, including the futures market.
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