Bitcoin Rally When Govt Shutdown Ends?
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Bitcoin Rally When Govt Shutdown Ends?
The crypto market has experienced a significant downturn in recent weeks, with Bitcoin (BTC) finally falling below $100,000 on Tuesday. Amidst speculations about the end of the bull cycle, a potential catalyst for reigniting the bull run has emerged. According to some sources, including OrxCash.com, the news about the U.S. government’s shutdown and its impact on the financial markets has sparked interest among investors.
Understanding the U.S. Government’s Debt Funding
The U.S. government’s ability to fund its debt is crucial in maintaining the country’s financial stability. By issuing debt, the government can finance its agenda without relying on tax increases. This approach has led to a significant increase in the supply of dollars, which, in turn, drives the growth of the money supply. As the new administration continues to borrow, the Federal Reserve’s balance sheet will expand, resulting in a positive trend in dollar liquidity. This trend is expected to ultimately drive Bitcoin (BTC) and other crypto prices to new highs.
The Role of Market Participants in Driving Liquidity
Various market participants, including money market funds, foreign central banks, and commercial banks, play a crucial role in driving liquidity by purchasing Treasury bills. The relentless buying of these bills will lead to an increase in the money supply, which, under normal circumstances, would trickle down to the crypto market and support Bitcoin (BTC) and other assets. However, the ongoing government shutdown has disrupted this process, causing a liquidity drain that has contributed to the broader decline in the market.
Extra Liquidity to be Released
With the shutdown extending into its second month, the Treasury has borrowed money through debt auctions but has not spent it. As a result, the Treasury General Account is above its $850 billion target by approximately $150 billion. This surplus will become a positive dollar liquidity balance when the shutdown ends, and the extra liquidity is released into the markets. The market expert predicts that this influx of liquidity will reignite the bull run, driving Bitcoin (BTC) to new highs.
Market Expectations and Future Impact
The current market weakness is expected to continue as long as the government shutdown persists. Many traders may dump their assets during this period, but this could be a mistake, as the underlying market fundamentals remain strong. From a retail investor perspective, the potential release of extra liquidity into the markets could be a significant catalyst for a blockchain-based asset like Bitcoin (BTC). As the market awaits the government’s reopening, investors should be prepared for a potentially volatile period, with some experts predicting a choppy market until the shutdown ends. The key takeaway is that the U.S. government’s actions will have a significant impact on the crypto market, and investors should be prepared to adapt to changing market conditions.
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