🤑 Bitcoin’s Wild Ride: Did the U.S. Treasury Steal Its Mojo? 🤔

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Markets

What to know:

  • While the Treasury General Account refill has likely weighed on crypto, broader risk assets like tech equities and gold remain as stubborn as a Missouri mule at record levels.
  • Tech stocks and gold continue to hit new highs, raising questions about Pal’s liquidity-driven explanation-or maybe they’re just better dancers? 💃🕺

Raoul Pal, the self-proclaimed prophet of Global Macro Investor, has been wagging his finger at a chart that’s been making the rounds faster than gossip in a small town. This chart, mind you, compares bitcoin’s (BTC) gyrations with the global M2 money supply. Quite the spectacle, if you ask me.

Now, this chart claims that since early 2023, bitcoin has been shadowing global M2 like a faithful hound, with a consistent 12-week lag. That’s right, folks-liquidity changes apparently take a three-month siesta before they tickle the crypto markets. Based on this, bitcoin should be sashaying toward $200,000 by the end of 2025. If only life were that predictable! 🌈

But alas, since July 16, this cozy relationship has gone kaput. While global M2 keeps climbing like a mountain goat, bitcoin has been lounging sideways, as if it’s too tired to care. And all this despite its supposed undying love for liquidity. 🤷‍♂️

The TGA: Crypto’s Party Pooper 🎉🚫

Pal, ever the optimist, insists this isn’t a flaw in his model but rather the handiwork of the U.S. Treasury and its Treasury General Account (TGA). The TGA, for those not in the know, is the government’s piggy bank at the Federal Reserve, where it stashes taxes, bond sale proceeds, and other goodies. When the Treasury decides to refill this piggy bank by issuing more bonds than it needs, it’s like sucking the punch bowl dry at a party-liquidity vanishes, and risk assets feel the pinch.

Since July, the Treasury has issued a cool $500 billion in bonds to plump up the TGA, pushing its balance to a whopping $800 billion. That’s a multi-year high, folks! This cash withdrawal has hit crypto harder than a pie in the face, leaving bitcoin stuck in neutral. 😵

But fear not, crypto enthusiasts! Pal believes the TGA is now full to bursting, so the liquidity drain should dry up by month’s end. If that happens, bitcoin might just dust itself off and resume its upward march, following its M2-driven destiny. 🚀

However-and there’s always a “however”-tech stocks and gold are still setting records like it’s nobody’s business. Seems like risk appetite is alive and kicking, which kinda pokes holes in Pal’s theory. Or maybe crypto is just the odd one out at this party? 🎉

To add insult to injury, the sharper impact on crypto could also be thanks to heavy selling pressure from long-held coins. So, maybe it’s not all the Treasury’s fault-bitcoin might just be having a bad hair day. 💇‍♂️

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2025-09-25 14:04