Market Liquidity Flow: Why TGA Is a Key Factor in Bitcoin's Weakness

As the US fiscal policy transition period nears its end, the crypto world is facing a unique challenge rooted in global market mechanisms rather than the digital sector itself. In recent weeks, Bitcoin and other risk assets have experienced significant pressure, which can be explained through a fundamental mechanism: a sharp contraction in dollar liquidity availability in the market.

Explanation of TGA: What Is the U.S. Treasury General Account Really?

TGA stands for Treasury General Account, known in Indonesian as the General Account of the U.S. Department of the Treasury. To understand why TGA is a crucial element in the global economy, it’s important to recognize that TGA functions as the federal government’s main cash account, where U.S. government funds are held at the Federal Reserve. When TGA balances increase, it means the U.S. government is collecting funds (in cash), which automatically reduces the total money circulating in the overall market system.

Arthur Hayes, the founder of BitMEX known for his in-depth macro analysis, recently highlighted this phenomenon. He revealed that approximately 300 billion dollars in liquidity flows have been drained from the market in a short period, based on data tracked by the analysis platform ChainCatcher. The primary driver behind this liquidity reduction is the increase of 200 billion dollars in the TGA balance itself.

Government Strategy: Hoarding Cash for a Shutdown Scenario

Why is the U.S. government doing this? Hayes suggests that authorities at the Department of the Treasury may be preparing for a potential government shutdown. By accumulating a large cash reserve in the TGA now, the government can ensure that federal operations continue even if budget negotiations between legislative branches reach a deadlock. This strategy is a common precautionary measure in American political cycles.

However, the side effect of this cash accumulation is very tangible for the global financial markets: liquidity sharply decreases. As the Treasury General Account grows, its effect is similar to draining supply from the economic system. Money that would normally circulate among investors, businesses, and speculators is now “locked” in the Federal Reserve vaults as government reserves.

Historical Correlation Between TGA and Risk Asset Performance

This pattern is not new in financial market history. Historical data shows that periods of TGA expansion—when the government is collecting funds—almost always coincide with tightening financial conditions. In such environments, high-risk assets, from tech stocks to cryptocurrencies, generally experience selling pressure. Investors tend to shift their capital into safer instruments when market liquidity shrinks.

Conversely, when the Treasury reduces its TGA balance—meaning it withdraws funds from federal reserves to finance expenditures—the effect is the opposite. Liquidity is injected back into the market, cash flows become smoother, and risk assets like Bitcoin tend to receive positive momentum.

Bitcoin Remains Tied to Global Liquidity Mechanics

Hayes makes an important point often overlooked by some crypto observers: Bitcoin and digital markets do not operate in a vacuum. They are highly responsive to macro liquidity conditions, especially those triggered by U.S. fiscal policy operations. The recent decline in Bitcoin is not surprising to those who understand how the TGA functions as a key instrument in controlling global capital flows.

In conclusion, when considering Bitcoin price fluctuations, investors need to look beyond technical charts or specific crypto news. The dynamics of the Treasury General Account, although seemingly technical and distant from the digital sector, are actually one of the most important determinants in the cycle of global risk assets, including Bitcoin.