Bitcoin News Today: U.S. Treasury Prepares $500-600 Billion TGA Refill Testing Market Liquidity

The U.S. Treasury is preparing to refill its General Account (TGA) with $500–600 billion over the next two months, a move that could challenge one of the most delicate liquidity environments in a decade [1]. According to Marcus Wu from Delphi Digital, this refill will test the resilience of risk assets, with stablecoins potentially bearing the initial brunt of the liquidity drain [1].

In 2023, a similar TGA rebuild was cushioned by $2 trillion in the Fed’s Reverse Repo Facility, strong bank reserves, and robust foreign Treasury demand. These buffers no longer exist, meaning that this year’s refill will directly draw from active market liquidity, amplifying stress transmission into risk assets [1].

Wu argues that crypto markets, particularly stablecoins, are likely to show the earliest signs of strain. He notes that in 2021, stablecoin supply expanded even as the TGA rose, reflecting the post-COVID liquidity environment. In contrast, in 2023, stablecoin supply contracted by more than $5 billion, coinciding with a stall in crypto activity. As of 2025, the conditions are tighter still, making crypto the first place where funding stress may surface [1].

The risks are not evenly distributed. While Bitcoin may prove more resilient, Wu warns that higher-beta tokens like Ethereum are more vulnerable in tight liquidity conditions. If stablecoin supply contracts during the refill, ETH and other risk assets are likely to see disproportionately larger declines compared to BTC, unless offset by structural inflows from ETFs or corporate treasuries [1].

A structural shift is also emerging: stablecoins themselves are becoming major buyers of U.S. Treasuries. Tether and Circle now hold over $120 billion in U.S. government debt, and Wu projects that stablecoin demand for Treasuries could rise to $1 trillion by 2028. This creates a feedback loop where digital dollar rails directly absorb U.S. debt issuance, reshaping both crypto and U.S. debt markets [1].

Wu outlines four phases for how the liquidity shock may unfold: strength into late August, a sharp drain in September as issuance accelerates, potential fatigue in October–November with the risk of stablecoin contraction, and a possible recovery as headwinds fade into December and January [1].

The key indicator to monitor is stablecoin supply versus TGA balance. If stablecoins expand while the TGA climbs, crypto may weather the storm better than in previous cycles. If supply contracts, the liquidity drain will transmit more quickly and forcefully [1].

Wu emphasizes that this is not a long-term bearish outlook but a defined headwind that will shape capital flows in the fourth quarter. The eventual completion of the TGA refill may set the stage for the next crypto rally, but until then, liquidity conditions warrant closer attention than headlines suggest [1].

Source: [1] This Litte-Known Plan By The US Treasury Could Derail The Bitcoin, Ethereum Bull Run (https://www.benzinga.com/crypto/cryptocurrency/25/08/47231171/this-litte-known-plan-by-the-us-treasury-could-derail-the-bitcoin-ethereum-bull-run?utm_source=coingecko&utm_campaign=partner_feed&utm_medium=partner_feed&utm_content=site)