TGA and Fed Moves Pit Crypto Bulls vs. Bears as 2025 Looms

The U.S. Treasury General Account (TGA) has emerged as a pivotal factor in shaping Bitcoin’s recent market dynamics, with analysts debating its implications for the broader cryptocurrency landscape in 2025. As the Treasury refills the TGA to a multi-year high of approximately $800 billion, liquidity conditions for risk assets—including Bitcoin—have tightened, according to macroeconomic analysts. The TGA, which serves as the government’s operating account at the Federal Reserve, has drawn $500 billion in liquidity since July 2025 through bond issuance, siphoning funds from markets and constraining capital available for speculative assetstitle1^[1]. This liquidity drain has contributed to Bitcoin’s sideways movement despite rising global M2 money supply, a metric historically correlated with crypto price trendstitle10^[6].

Raoul Pal, founder of Global Macro Investor, argues that the TGA-driven liquidity squeeze is temporary. He posits that Bitcoin’s long-term trajectory remains aligned with global M2 growth, which has continued to expand despite the recent divergence. Pal forecasts a potential $200,000 price target for Bitcoin by year-end 2025 if the M2 correlation resumestitle1^[1]. However, this outlook faces skepticism from analysts like Tomas (@TomasOnMarkets), who warn that the TGA refill could further tighten liquidity, creating a bearish environment for Bitcoin as the U.S. dollar strengthenstitle3^[3]. The debate underscores the complexity of linking Bitcoin’s price to macroeconomic indicators, with critics highlighting that tech stocks and gold have defied liquidity pressures by hitting record highstitle1^[1].

The Federal Reserve’s policy trajectory adds another layer of uncertainty. The Fed’s September 2025 rate cut—its first since 2024—has been cited as a potential catalyst for renewed liquidity flows, with 91.9% of traders anticipating a 50-basis-point reduction at the October FOMC meetingtitle2^[2]. Arthur Hayes of BitMEX suggests that a stabilized TGA and easing monetary policy could reignite Bitcoin’s bull run, positioning the cryptocurrency to benefit from lower borrowing costs and renewed risk appetitetitle2^[2]. Conversely, Tomas cautions that the Fed’s lack of consensus on future rate moves and the risk of stagflation could disrupt this optimistic outlooktitle3^[3].

Beyond Bitcoin, altcoins like Solana (SOL) and Ethereum (ETH) are also under scrutiny for 2025. Pal emphasizes that altcoins typically outperform Bitcoin in the latter half of liquidity cycles, driven by heightened risk appetite. Despite Solana’s recent 53% drawdown, he argues that its alignment with global M2 trends suggests potential for a rebound. Ethereum and Sui are also highlighted as key components of his portfolio, with Sui projected to outperform Solana in the coming months. The altcoin market’s performance, however, remains contingent on macroeconomic conditions and liquidity availability.

Market participants are closely monitoring the interplay between TGA dynamics, Fed policy, and global liquidity trends. The TGA’s refill is expected to conclude by late 2025, with liquidity normalization potentially resuming Bitcoin’s upward trajectory. However, the path is not without risks. Money market funds have reached a record $7.5 trillion, with capital currently parked in low-risk assets. A shift toward riskier investments could further boost crypto prices, but this depends on broader economic stabilitytitle2^[2]. Analysts like Jamie Coutts from Real Vision predict Bitcoin could surpass $132,000 by year-end if money supply trends persisttitle2^[2], while others warn of volatility from geopolitical or economic surprises.

The debate over Bitcoin’s correlation with global M2 has intensified, with critics like TXMC challenging the validity of the metric. He argues that Global M2 calculations are flawed due to inconsistent data update frequencies across countries, rendering the correlation between Bitcoin and M2 unreliable. Despite these critiques, proponents maintain that liquidity cycles remain the dominant driver of Bitcoin’s long-term price action, with Pal’s model suggesting the bull market could extend into 2026. This extended outlook hinges on sustained monetary easing and a gradual rather than explosive market peak.

As the TGA refill nears completion and Fed policy shifts, the cryptocurrency market faces a critical juncture. The interplay of liquidity, monetary policy, and risk appetite will likely determine whether Bitcoin and altcoins can capitalize on the next rally. Investors are advised to monitor TGA balances, Fed rate decisions, and global money supply trends, while remaining cautious of overleveraged positions and market volatilitytitle3^[3].