The sharp contraction in US dollar liquidity in recent weeks has brought macroeconomic risks to the agenda again in the cryptocurrency market. Arthur Hayes, one of the co-founders of BitMEX, stated that dollar liquidity decreased by approximately 300 billion dollars, and this development made the decline in Bitcoin’s price not surprising. According to Hayes, the main reason for the decline was the rapid increase in the cash position of the US Treasury Department. Increasing uncertainty in the markets points to a new period that suppresses investors’ risk appetite.
The Reason for the Sharp Contraction in US Dollar Liquidity
According to the assessment shared by Arthur Hayes on the X platform, there has been a decrease of approximately $300 billion in US dollar liquidity in the last few weeks. Most of this decrease was due to an increase of approximately $200 billion in the US Treasury General Account (TGA). The rise in NPL means withdrawal of liquidity from the market and puts direct pressure on financial assets.
Hayes stated that the reason behind the government’s rapid increase in cash balance is the possibility of preparations for a possible federal government shutdown. While uncertainties regarding the budget process continue in Washington, it is seen as a normal practice to save cash in advance to avoid cuts in public expenditures. However, this process reduces the circulation of the dollar within the financial system in the short term.
The tightening in liquidity conditions is of critical importance, especially for cryptocurrencies, which are in the risky asset class. The shrinkage of dollar supply in global markets paves the way for investors to exit leveraged positions and increase volatility.
Background of the Retreat in Bitcoin Price
Hayes emphasized that the decline in Bitcoin’s price is compatible with the liquidity contraction in question. According to him, it is unrealistic to expect strong and permanent increases in the cryptocurrency market while the decrease in dollar liquidity continues. Bitcoin stands out as an asset that is highly sensitive to global liquidity conditions.
Recently, funds directed to the US Treasury General Account have increased the amount of cash withdrawn from the financial system. While this development caused investors to act more cautiously, it brought with it sales pressure in cryptocurrencies. Hayes’ assessment reflects an approach that reads price movements through macro financial dynamics rather than short-term speculation.
Contrary to the optimistic price expectations often seen in the cryptocurrency market, Hayes pointed out that the decline in dollar liquidity is a fundamental signal that should not be ignored. It has been demonstrated once again that Bitcoin’s performance is closely linked to the financial policies and cash management of the USA.
