Where Could the Liquidity Come From?

At the heart of Hayes’ argument is the US Treasury General Account (TGA), essentially the government’s primary cash account held at the Federal Reserve. When balances in the TGA are elevated, funds remain parked and largely outside the broader financial system. As the balance declines through government spending, liquidity flows back into banks and markets.

Currently, the TGA balance stands near $750 billion, while the Treasury’s guidance suggests a target closer to $450 billion. That gap implies roughly $301 billion could be released into the financial system as the balance is drawn down.

In addition, the Treasury has initiated bond buybacks aimed at improving market functioning by repurchasing older debt. Hayes estimates that, at the current pace, these buybacks could inject another $271 billion annually. Combined, these two channels represent a potential liquidity boost of approximately $572 billion.

A Form of “Stealth Stimulus”?

Although this process is not formally labeled as monetary easing, Hayes argues that its practical effect may resemble stimulus. While the Federal Reserve maintains a tight policy stance in its messaging, Treasury operations are simultaneously increasing cash circulation. In liquidity-driven markets, capital flows often carry more weight than rhetoric.

Historically, periods of expanding liquidity have tended to support risk assets, including cryptocurrencies.

What Does This Mean for Bitcoin?

Hayes believes the most difficult phase for crypto may already be over. He points out that Bitcoin has historically shown a strong relationship with global liquidity conditions. When US dollar supply expands, scarce assets such as BTC often experience upward pressure.

He also notes that extreme funding rates suggest crowded short positioning in the market. If fresh liquidity enters the system while traders are heavily positioned to the downside, a sharp short squeeze could follow. In that scenario, Hayes sees room for Bitcoin to revisit all-time highs and potentially approach the $100,000 level.

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The World Gold Council’s latest data shows that central banks purchased a net 53 tons of gold in October, marking the strongest monthly demand of 2025. Poland and Brazil led the buying trend, followed by several emerging-market economies seeking to diversify away from the US dollar. This renewed appetite reflects shifting reserve preferences across developing countries.

Poland added 16 tons in October, lifting its reserves to 531 tons, around 26 percent of its total foreign assets. Brazil also bought 16 tons, while Uzbekistan added 9 and Indonesia 4. Türkiye, the Czech Republic and Kyrgyzstan increased holdings by 2 to 3 tons. Ghana, China, Kazakhstan and the Philippines expanded reserves gradually, whereas Russia reduced its holdings by 3 tons to 2,327.

Central banks are ramping up gold purchases:

Global central banks purchased +53 tonnes of gold in October, the most since November 2024.

This marks a +194% jump compared to July, and the 3rd-straight monthly acceleration.

In the first 10 months of the year, central banks have… pic.twitter.com/7pZWyEjjvf

— The Kobeissi Letter (@KobeissiLetter) December 4, 2025

A New Phase in the US Bitcoin Debate

The United States has intensified its discussion around Bitcoin after establishing a national BTC reserve framework. The initiative became official with a presidential order in March 2025, designating Bitcoin as a national reserve asset and placing about 200,000 BTC under Treasury management through seized funds. Analysts argue this approach could influence long-term debt dynamics, though others warn that large-scale government accumulation may impact market stability.

Momentum is also growing at the state level. In November, Texas became the first US state to purchase Bitcoin for its treasury, investing 10 million dollars through BlackRock’s spot ETF during a price dip. Seventeen states are now reviewing similar reserve legislation, signaling deeper integration of digital assets into public finance.

A Global Shift Toward Digital Reserves?

The trend is not limited to the United States. Governments across Asia and Europe are reassessing their reserve compositions and considering whether to include digital assets. Countries aiming to reduce reliance on the US dollar are exploring alternatives more actively.

Forecasts vary among analysts. VanEck estimates that acquiring one million Bitcoin by 2029 could offset roughly 18 percent of US federal debt by 2049. CoinShares highlights potential benefits for technological leadership and inflation protection, while Chainalysis warns of instability if multiple nations accumulate BTC simultaneously.

Some projections suggest Bitcoin may appear on central bank balance sheets by 2030, complementing gold as a dual safe-haven structure. As the global economic order evolves, countries are accelerating their search for next-generation reserve strategies, and digital assets are becoming an increasingly important part of that conversation.

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This statement is interpreted as a significant signal that the government may move beyond support provided through tax obligations and aim for returns through investments.

Powell Opens the Door to a Rate Cut!

Federal Reserve Chairman Jerome Powell delivered new assessments of the economy at the Jackson Hole meeting of economists. Highlighting the risks in a weakening labor market, he suggested that a rate cut could be considered; however, he also pointed out that inflation still has the potential to rise.

You may also be interested in this article: BNB Treasury’s Big Move: Targeting a $1 Billion Fund!

Following these developments, markets around the world experienced volatility:

• Barclays and BNP Paribas began forecasting that the Fed will implement a 25 basis point rate cut in September 2025. They also noted that two separate cuts could take place within the year.
• Stock markets reflected a positive mood. The S&P 500, Dow Jones, and Nasdaq indices rose; bond yields declined. Small-cap stocks particularly stood out.
• Market probability rose to 87–90%, meaning the September rate cut has become largely “priced in.”

In his speech, Powell strongly emphasized that the Fed’s decisions would be entirely data-driven and that it would maintain its independence.

Kevin Hassett’s statement that the government may take stakes in companies signals a new era in economic policy that is centralized and investment-oriented. Meanwhile, Jerome Powell appears ready to take steps toward flexibility in interest rates while remaining committed to the Fed’s independence and data-driven decision-making.

When these two developments are evaluated together, it becomes clear that a new search for balance between public policy and monetary policy is underway. Upcoming economic data in the coming weeks will reveal this balance more clearly.

For breaking cryptocurrency news, click here

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US Treasury Chief: Urges Congress to Raise Ceiling

In an interview with CBS News, he said: 

“The United States will never default. That will never happen; we are on the warning line and will not hit the wall.” 

Bessent’s remarks came as Congress approaches the mid-July deadline to raise the debt ceiling. Current estimates indicate that the government’s borrowing authority will be exhausted by that date. Bessent warned that if the debt ceiling is not raised before then, the government may lose its ability to make debt payments. Budget analysts predict the Treasury will exhaust its extraordinary measures to make debt payments by the end of summer. 

Bessent also pushed back against JPMorgan CEO Jamie Dimon’s warnings of a collapse in the U.S. bond market. Dimon criticized government spending post-pandemic and quantitative easing policies. He suggested that rising debt levels could increase the risk of a future crisis. However, Bessent noted that Dimon’s past predictions have not come true: 

“I’ve known Jamie for a long time, and throughout his career, he has made such predictions. Fortunately, none have been accurate,” he said. 

Bessent said that reducing the debt level will be a gradual process over four years. Additionally, former President Trump used his proposed tax and spending package as a tool to raise the debt ceiling. This package could further increase the debt level. 

These concerns led Moody’s Ratings to downgrade the US credit rating from the highest level, Aaa, to Aa1. Moody’s became the third major credit rating agency to downgrade the U.S. government’s credit rating since 2011. 

US Treasury Secretary Scott Bessent emphasizes that the country will not default despite its debt load. He called on Congress to raise the debt ceiling. However, concerns about debt sustainability and economic stability remain. 

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At Capitol Hill, Lummis stated:
“Default collapses everything. The system is built on trust. If we fail to pay our debts, trust vanishes.”
She highlighted the dollar’s fragility:
“How we price assets matters. But that measure is bending. When it does, prices rise even if real value doesn’t. My advice? Buy real assets or get left behind.”

She outlined three scenarios: total bankruptcy, printing money for hyperinflation, or salvation through crypto and technology. In January 2025, Treasury Secretary nominee Scott Bessent told a Senate hearing that removing the debt ceiling isn’t simple.
“If confirmed, I won’t let the US default,” he said, adding he’d follow Trump’s orders if instructed. However, he compared the debt ceiling to a car’s parking brake:
“Without it, you can still brake, but you lose a feature.”

Bitcoin as a Solution to the Debt Crisis

Lummis champions Bitcoin’s deflationary nature as a way to strengthen the economy.
“If money printing continues, the dollar will collapse. We’ll see hyperinflation like Zimbabwe or the Weimar Republic. Rent, gas, and food prices will soar while wages stagnate. That’s not the future I want for Americans,” she said.

She praised Bitcoin, stating:
“Technology boosts productivity and cuts costs. It lets us grow faster than our debt.”
Lummis pointed to artificial intelligence, robotics, and crypto as examples of this shift.
“These aren’t trends; they’re tools. They’re the only real weapons we have,” she said.

Meanwhile, Michael Saylor claims the bill could balance $16 trillion in debt. States like Pennsylvania and Texas are exploring Bitcoin reserves. At the Bitcoin 2025 conference, Lummis will discuss the bill’s impact. The crypto market is debating whether the bill could spark financial innovation.

Bill Details and Economic Chaos

The bill proposes that the Treasury purchase Bitcoin using Federal Reserve profits. The Bitcoin holdings would be auditable via a transparent blockchain. Senators Jim Justice and Tommy Tuberville support the bill. Trump’s executive order aims for budget-friendly growth of the reserve, while the Treasury grapples with the debt ceiling crisis.  On April 30, the Treasury Borrowing Advisory Committee warned that the current system creates “volatility, high costs, and threats to the dollar’s global status.”

The Treasury has been depleting cash reserves since February. The Congressional Budget Office predicts borrowing options could run out by August. Lummis cautioned that the dollar could lose power, like the British pound:
“It didn’t vanish; it just lost its strength.”

Bessent’s remarks and Lummis’s call for real assets underscore the bill’s urgency.

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In a rule proposal released on May 1, the Treasury’s Financial Crimes Enforcement Network (FinCEN) urged US banks to terminate correspondent and payable-through account services for Huione.

Deputy Treasury Secretary Scott Bessent described Huione as the “marketplace of choice for malicious cyber actors,” accusing it of aiding the theft of billions from ordinary Americans.

$4B Laundered, USDH Highlighted

According to FinCEN, Huione laundered over $4 billion in illicit funds between August 2021 and January 2025, including at least $36 million from crypto “pig butchering scams” and $37 million directly linked to North Korean cyberattacks.

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Its online service Haowang Guarantee has turned Huione into a one-stop crypto laundering hub, offering illegal goods and converting crypto to fiat currency.

FinCEN also flagged Huione’s stablecoin, the USDH (US dollar Huione), for its unfreezeable nature, which allegedly supports laundering operations.

Indirect US Bank Access and Regulatory Action

While Huione doesn’t hold direct accounts with US banks, FinCEN revealed it maintains accounts with foreign intermediaries that do, giving it indirect access to the US financial system.

The National Bank of Cambodia revoked Huione’s local banking license in March 2025, citing digital asset violations.

The proposed rule will undergo a 30-day public comment period before potentially being finalized.

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Warren’s Open Letter and Criticism of Crypto

In her January 12 letter, Warren highlighted the use of digital assets by bad actors for money laundering, sanctions evasion, and financing national security threats. Citing examples such as North Korea’s nuclear program, Russia’s attacks on Ukraine, and ransomware incidents, Warren stated, “These threats pose serious risks to US national security.”

She posed several questions for Bessent to address during his confirmation hearing:

• Should the Office of Foreign Assets Control (OFAC) have authority over stablecoins?
• Should the scope of the Bank Secrecy Act (BSA) extend to foreign crypto companies linked to US markets?
• Should secondary sanctions be introduced to cut fintech and crypto operators from US relations?

Warren has previously introduced the Digital Asset Anti-Money Laundering Act in 2022 and 2023. However, the proposal faced criticism from US-based crypto advocates and 80 former security officials, who argued it could push the industry overseas and heighten national security risks.

Is Trump’s Crypto-Friendly Agenda on the Horizon?

Donald Trump, set to be inaugurated on January 20, is expected to take significant steps favoring the crypto sector. According to The Washington Post, Trump may sign executive orders addressing crypto de-banking and overturning a rule that requires banks to report crypto assets as liabilities.

During the Bitcoin 2024 Conference, Trump vowed to make the US a “crypto capital,” promising a Bitcoin strategic reserve and reduced regulatory pressure on the industry.

Excitement Grows in the Crypto Industry

Trump’s Treasury appointments and executive orders are highly anticipated by the crypto community. Additionally, venture capitalist Marc Andreessen has reportedly been advising Trump on key administration roles, focusing on technology, defense, and intelligence.

Trump’s policies could eliminate Biden-era restrictions like “Operation ChokePoint 2.0,” which limited the industry’s access to financial services. Meanwhile, Warren’s calls for stricter oversight signal potential challenges ahead.

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