Bitcoin’s Big Breakout? Fed’s “Not QE, QE” Just Turned On
The new liquidity of the TGA in the U.S. Treasury General Account (TGA) has caused a sensation among market observers, and some analysts speculate that this could be a key trigger for Bitcoin’s next major move. While the Fed continues its quantitative tightening program (QT) program, TGA’s latest cash injection (up to $842 billion) has sparked debate on whether we are witnessing a stealth version of quantitative easing, sometimes called “not QE, QE, QE, QE, QE, QE, QE, .”
The Fed’s “not QE, QE”
exist postal Macro analyst Tomas (@TomasonMarkets), shared on X, offers a breakdown of how this dynamic plays: “‘Not QE, QE’ has officially begun. Starting this week, a total of $84.2 billion from the U.S. Treasury Department’s total account starts. liquidity injection. Functionally, this is similar to quantitative easing, but temporarily the basis.”
The background of this surge in liquidity is the binding $36 trillion debt limit. The Treasury was forced to rely on the issuance of new debts until a brand new debt ceiling agreement was reached. TGA funds Covering government expenditure obligations. As of Tuesday, February 11, the TGA balance (as of $842 billion) effectively injected liquidity into the financial markets.
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According to Tomas, the U.S. Treasury Department’s TGA spending “train” began seriously on Wednesday, February 12: “As far as I understand, the formal’ is now underway until the legislators reach a new debt ceiling agreement , it will stop.”
He predicts that the first part of the process could be about $600 billion in injections between February 12 and April 11. TGA temporary replenishment may occur after April’s tax season, but until a new debt ceiling agreement is reached, the Treasury will probably continue to consume existing cash reserves.
While some observers are calling this development with de facto quantitative easing measures, Thomas stressed that the ultimate net impact depends on the impact on two key drains on liquidity: the Fed’s monthly price for about $55 billion Price rolling assets, Thomas expects this to continue at the next FOMC meeting in at least March. Over two months, this means an estimated $110 billion in liquidity reduction.
As the Treasury issued fewer T-Bills due to the restrictions on debt restrictions, a “net negative T-Bill issuance” – money market funds may have fewer short-term government securities purchases. This scarcity could prompt them to park more cash in the Fed’s reverse buyback facility, effectively draining liquidity in the wider market.
Thomas noted: “This may incentivize money market funds to stop cash in the Fed’s reverse repurchase, which has the potential to push this chart up… The increased use of reverse repurchase will be liquidity for liquidity because money The Federal Reserve will move away from the market and enter the reverse repurchase facility on the market.”
Overall, the true scale of TGA-based stimuli remains uncertain. Last week, net injections to the system were estimated at $50 billion, a figure that could fluctuate in the coming weeks as QT and reverse buyback demand develops.
Another key part of the puzzle is the ongoing political deadlock in the debt ceiling. Despite the call for bipartisan cooperation, the division between the narrow Republican majority (with the broad democratic opposition) was combined to resolve quickly.
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House Republicans recently proposed a plan to raise debt ceilings with “trillions of dollars” tax breaks. However, the adoption of this measure is far from ensuring, as very conservative members object to any debt restrictions in principle. Past increases often require cross-party support, indicating a potential deadlock.
“This is the shoulder of House Speaker Mike Johnson, who is trying to assemble legislators,” Thomas noted.
Will Bitcoin benefit?
For Bitcoin traders, these Fluid tide rises and falls Often associated with broader risk appetite – Bitcoin has historically seen price increases during periods of monetary policy easing and liquidity injections. Although the Fed did not immediately stop QT, the recent cash flood of TGA shrinking can still surface risky assets, including Bitcoin.
To be precise, it remains to be seen how much of these “QE, QE” is dropping into Bitcoin. However, for market participants who watch daily net liquidity indicators, TGA shrinkage, QT and reverse repurchase Usage has become the central storyline. As Washington’s deadlock continues, Bitcoin space will monitor all the speed of lifting and declining in the Fed’s liquidity chart – allowing it to flip the switch in the next big breakout for Bitcoin.
At press time, Bitcoin was trading at $96,424.
Featured Images created with dall.e, Charts for TradingView.com
