Bitcoin Price: Liquidity Crunch Ahead?
President Trump's new spending bill may trigger a significant liquidity drain, potentially impacting Bitcoin's price, according to Arthur Hayes, BitMEX co-founder. His recent article discusses the implications of this "Big Beautiful Bill" and its effect on the crypto market.
Key Implications of the Debt Ceiling Increase
The bill's passage will allow the US Treasury to replenish its Treasury General Account (TGA), currently at $364 billion. The target is $850 billion, meaning a near $500 billion liquidity drain from the markets. This could negatively affect Bitcoin and other risk assets.
Hayes's Bitcoin Price Prediction
- Bearish Scenario: A liquidity crunch could cause Bitcoin to retest the $90,000 - $95,000 range before resuming its uptrend.
- Bullish Scenario: If markets absorb the bond issuance smoothly, Bitcoin could remain range-bound in the $100,000s, though an immediate break above the all-time high of $112,000 before September is unlikely.
Hayes anticipates sideways or slightly downward market movement until Jerome Powell's Jackson Hole Symposium speech in August. Powell's comments on quantitative tightening or regulatory changes could significantly impact liquidity and Bitcoin's price.
The Larger Liquidity Picture
Despite the potential short-term dip, Hayes maintains a bullish long-term outlook for Bitcoin. He believes over ten trillion dollars in liquidity could enter the system due to factors like stablecoin adoption by major banks and the potential end of the Fed's interest payments on reserves. However, he cautions that significant market shifts hinge on geopolitical events and the stability of major financial institutions.
At press time, Bitcoin was trading near $109,200.
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