Bitcoin’s Rally Hinges on TGA Liquidity Debate as $850B Target Nears

Arthur Hayes, co-founder of BitMEX, has asserted that Bitcoin’s upward trajectory could resume as the U.S. Treasury General Account (TGA) nears its $850 billion replenishment target. Hayes argues that the TGA’s liquidity drain—where funds are sequestered in the Treasury’s account rather than circulating in private markets—has temporarily stifled market activity. With the TGA’s opening balance exceeding $807 billion as of late September 2025, Hayes claims the removal of this liquidity constraint will “allow up only to resume,” creating favorable conditions for risk assets like Bitcoin. The TGA, which serves as the U.S. government’s primary checking account at the Federal Reserve, has been a key factor in shaping market liquidity since the Treasury began refilling it in 2025.

The TGA’s refill has coincided with a pullback in Bitcoin and other risk assets. Bitcoin’s price fell to $113,500 in September 2025, down from earlier highs above $124,000, as liquidity contraction pressured speculative trading. This aligns with broader market trends, including a 1.4% decline in the Nasdaq, underscoring the interconnectedness of liquidity and asset performance. Hayes attributes this to the Treasury’s issuance of debt to fund the TGA refill, which has siphoned cash from the financial system. However, the process is nearing completion, with analysts estimating that the liquidity drain will reverse as the TGA stabilizes.

The Federal Reserve’s recent rate cuts have added to the bullish narrative. In September 2025, the Fed cut interest rates by 25 basis points—the first reduction since 2024—marking a shift from years of tightening. This dovish pivot has historically supported risk assets, including Bitcoin, by lowering borrowing costs and encouraging capital flows into speculative markets. Market expectations for further cuts remain strong, with 91.9% of traders anticipating a 50-basis-point reduction at the October FOMC meeting, according to CME Group data. The Fed’s rate-cutting cycle is seen as a catalyst for renewed liquidity, which could fuel a Bitcoin rally once the TGA refill concludes.

Skeptics, however, question the direct link between TGA liquidity and Bitcoin’s performance. André Dragosch, European head of research at Bitwise, dismissed the correlation as “useless,” arguing that net liquidity has only a loose relationship with crypto markets. Similarly, macro analyst Tomas warned that the TGA refill could tighten liquidity further, acting as a headwind for Bitcoin. The debate highlights divergent views on how fiscal and monetary policies interact. While Hayes and others see the TGA’s stabilization as a green light for risk-on momentum, critics emphasize the complexity of liquidity dynamics and the potential for geopolitical or economic shocks to disrupt the narrative.

The potential for a Bitcoin rally is also tied to broader macroeconomic trends. Money market funds have swelled to a record $7.5 trillion as of mid-September 2025, with much of this capital parked in low-risk assets. As risk appetite returns, these funds could flow into stocks, bonds, or crypto, amplifying upward momentum. Hayes has repeatedly argued that Bitcoin’s price is driven by expectations of future fiat supply, positioning it to benefit from Fed-driven liquidity injections. Meanwhile, analysts like Jamie Coutts of Real Vision have projected Bitcoin exceeding $132,000 by late 2025 if money supply trends continue, adding credibility to the bullish case.

The interplay between the TGA, Fed policy, and Bitcoin remains a key focus for investors. While the Treasury’s refill has created short-term headwinds, the combination of a stabilizing TGA, rate cuts, and pent-up liquidity could set the stage for a renewed rally. However, uncertainty persists. The Fed’s divided stance on future cuts and the possibility of stagflation—where high inflation coexists with weak growth—introduce risks. For now, the market is pricing in aggressive easing, with Bitcoin’s trajectory hinging on whether liquidity gains outweigh macroeconomic headwinds.

Source: [1] Arthur Hayes (https://cointelegraph.com/news/crypto-up-only-mode-us-tga-850b-arthur-hayes) [2] Arthur Hayes (https://www.btcc.com/en-US/square/Cryptoslate/989210) [3] Arthur Hayes (https://cryptorank.io/news/feed/04ddb-with-the-treasury-general-account-refill-almost-done-up-only-can-resume-arthur-hayes) [4] Arthur Hayes (https://menafn.com/1110088574/Crypto-Markets-Surge-After-US-Treasury-Reaches-850-Billion-Target-Analyst-Predictions) [5] Arthur Hayes (https://www.thecoinrepublic.com/2025/09/18/what-bitcoin-btc-usd-path-to-250000-hinges-on-arthur-hayes-explains/) [6] Arthur Hayes (https://thefinancialanalyst.net/2025/07/07/bitcoin-faces-headwinds-as-fed-liquidity-tide-recedes/)