Bitcoin News Today: TGA's $1 Trillion Liquidity Vacuum Pushes Bitcoin to 6-Month Low

Bitcoin Faces Liquidity Crisis as U.S. Government Shutdown Drains $1 Trillion from Markets

Bitcoin's 19% decline from its October peak has been exacerbated by a U.S. government shutdown that has drained $700 billion from financial markets via the Treasury General Account (TGA), according to a Bitget report. The TGA, which acts as the government's central checking account, has swelled to nearly $1 trillion, creating a liquidity vacuum that has starved risk assets of capital. This structural tightening, driven by the Treasury's pre-emptive "cash hoarding" to fund essential operations during the shutdown, has accelerated Bitcoin's correction while triggering record usage of the Federal Reserve's overnight repo facilities.

Bitget noted that the TGA's ballooning balance—up from $800 billion to over $1 trillion since October 10—has effectively locked liquidity in the Fed's vaults, preventing it from circulating in the banking system. This has forced banks to borrow at elevated rates, with the SOFR–FDTR spread widening to +30bp, the highest since March 2020. The Federal Reserve has responded by injecting $30 billion in liquidity through temporary repo operations, a first since the 2019 repo crisis. Analysts argue this signals a shift from passive balance sheet reduction to active liquidity management, with further injections likely if the shutdown extends beyond mid-November.

According to a Decrypt report, BitMEX analysts predict a "strong relief rally" once the shutdown ends, as the Treasury resumes spending and the TGA balance declines, releasing hundreds of billions back into markets. They link this to Bitcoin's historical end-of-year seasonal strength, arguing the 4-year bull cycle is not yet complete. Arthur Hayes, co-founder of BitMEX, echoed these views, stating Bitcoin is in the "final drop" phase of its correction, with a potential rally on the horizon as fiscal spending resumes and rate cuts loom.

Market sentiment has deteriorated further as the shutdown nears 36 days—the longest in U.S. history—reported by Yahoo Finance. Bitcoin briefly dipped below $100,000 on November 5, its lowest since June, as investor concerns over liquidity and economic growth intensified. Whale selling has surged, with over 1 million bitcoins moved to exchanges in recent months, signaling profit-taking by long-term holders. Fundstrat's Sean Farrell noted that stalled TGA drawdowns have delayed liquidity tailwinds expected to support risk assets through year-end, but he remains optimistic about a post-shutdown rebound.

Odaily highlighted that the liquidity crisis has also exposed vulnerabilities in the broader financial system. Commercial real estate defaults hit a post-2008 high, with office building CMBS default rates at 11.8%, while subprime auto loan delinquencies have risen sharply. The Fed's SRF usage surged to $50.35 billion on October 31, reflecting banks' desperation for cash. These pressures, combined with the government's fiscal deadlock, have created a "perfect storm" for Bitcoin, which is particularly sensitive to liquidity shifts.

Optimists like Raoul Pal argue the current pain is temporary, as discussed in a Yahoo Finance article. He forecasts a liquidity flood in 2026 as the U.S. rolls over $10 trillion in debt and global central banks expand quantitative easing. However, pessimists warn the shutdown could deepen the crisis, with Mott Capital Management comparing the liquidity shock to the 2018 market turmoil. The outcome hinges on a Senate compromise before Thanksgiving, with Goldman Sachs predicting a resolution by November 15.

As the political impasse drags on, Bitcoin's fate remains intertwined with the TGA's trajectory. A resumption of fiscal spending could reignite a new liquidity cycle, but until then, the cryptocurrency faces continued headwinds from a system starved of dollars.