Bitcoin Rises to $92,120 Amid Improved Liquidity Conditions

Former BitMEX CEO Arthur Hayes highlights how US debt ceiling battles impact market liquidity. Spending from the Treasury General Account (TGA) injects new dollars into the system, boosting risky assets like crypto. Conversely, selling debt to refill the TGA withdraws cash, pressuring stocks and crypto.

In 2023, approximately $2.5 trillion from the Fed's reverse repo facility was available, influencing market dynamics.
Bitcoin recently fell towards $80,000 due to tightening liquidity but rebounded to $92,120, marking a potential cycle low.
The crypto market capitalization rose to over $3 trillion, with Bitcoin up 1.50% daily and 6.5% weekly. Ethereum saw a 4% daily and 11% weekly increase.

Market Dynamics in 2025

By 2025, reverse repo balances that aided earlier rallies diminished, with liquidity tightening by nearly $1 trillion due to Treasury debt issuance and Fed quantitative tightening.
This reduced cash availability pressured risk assets downward.

Cross-market effects were observed across stocks, gold, and property, all responding to liquidity shifts. The absence of liquidity from Fed facilities in 2025 heightened selling pressure and volatility.

Current Market Conditions

The Fed paused quantitative tightening, easing liquidity pressures in the Treasury market.
The TGA is stable, and banks are resuming lending, creating a favorable environment for price increases.
Hayes considers the dip to $80,000 as the cycle low, expecting upward momentum as cash conditions improve.