Bitcoin has long held sway as the unstoppable force in the digital financial landscape. However, a noteworthy shift is occurring, redirecting the focus from this decentralized asset to the US Treasury. In an era where liquidity drives the pulse of markets, the Treasury General Account (TGA) is emerging as a behemoth capable of influencing risk assets across the board.
Why Bitcoin’s Cycles Matter Less When Federal Cash Levels Shift
The most crucial chart to watch as 2026 approaches isn’t Bitcoin, but rather the US Treasury’s checking account. Crypto analyst Kyle Chassé remarked that the deceleration in crypto markets owes much to the complexities of government liquidity. As of now, the TGA has just climbed to $1 trillion, creating a significant liquidity vacuum in the cycle. This build-up of funds represents a considerable drain on the broader financial system.
To sidestep a recession as we approach 2026, the government must reverse this trend by expelling approximately $150 billion to $200 billion back into the banking ecosystem. Furthermore, with Quantitative Tightening (QT) officially coming to an end, the government has signaled that it will no longer withdraw liquidity, indicating a potential shift in asset pricing dynamics.
Notably, analyst Theunipcs revealed that the Federal Reserve has executed its third rate cut of 2025, marking the target range at its lowest in three years. Additionally, the Fed will inject around $40 billion each month through Treasury bill acquisitions. This pivot in policy follows Bitcoin’s bounceback from a steep 35% decline, representing the most significant pullback the asset has experienced in its current cycle.
Amid these developments, conservative asset management giants like Vanguard and Charles Schwab are beginning to introduce crypto products to their vast user bases. This trend signals that now may be the opportune moment to adopt a bullish stance by capitalizing on price dips.
Weekly Support Holds As Bitcoin Searches For a Relative Trend Reversal
Not all hope is lost for Bitcoin enthusiasts. Daan Crypto Trades, a dedicated trader in the crypto sphere, noted that Bitcoin is currently positioned roughly 18% higher than its 2021 highs in relation to the NASDAQ. Presently, the BTC/NASDAQ ratio is testing the Weekly Exponential Moving Average (EMA), which is providing critical support. Following a clear breakout earlier in 2024, Bitcoin’s momentum has waned as stocks advanced, fuelled by enthusiasm surrounding AI technology.
However, indications suggest that the momentum in tech stocks is starting to wane, albeit temporarily. Should this ratio begin to shift back in favor of Bitcoin, it could signal a return to form for the leading digital currency. Early signals indicate that Bitcoin is starting to outperform traditional indices like the Russell 2000 (Small Caps) as tech stocks cool off.
