Keyrock links Bitcoin price to treasury bill bupply
New research by market maker Keyrock suggests that the primary liquidity indicator influencing Bitcoin’s price is U.S. Treasury bill issuance, rather than the balance sheet of the Federal Reserve or any other central bank.
According to a new report from crypto investment firm and market maker Keyrock, quoted Cointelegraph, every 1% change in global liquidity impacts BTC’s price by 7.6% in the following quarter in which new money is created. However, Keyrock researcher Amir Hajian noted that not all liquidity affects risk asset prices equally.
The impact of the US Treasury issuing T-bills on Bitcoin’s price compared with other methods of liquidity expansion. Source: Keyrock.
Since 2021, Treasury bill issuance has shown roughly an 80% correlation with BTC’s price and leads Bitcoin by approximately eight months, the report states.
“When the Treasury increases Treasury bill issuance, it finances spending that flows into the real economy and ultimately into risk assets such as Bitcoin. When issuance declines or turns negative, that fiscal tailwind weakens,” Amir Hajian said.
Rising payments will require more bond issuance
Global liquidity is at a “turning point,” according to the Keyrock report, which notes that a significant portion of the $38 trillion U.S. national debt will mature over the next four years.
This means the U.S. Treasury will have to refinance much of the debt at higher interest rates, as a large share was issued during the era of near-zero rates.
As a result, the United States will almost certainly increase Treasury bill issuance to refinance its obligations. The report projects that annual Treasury bill issuance will reach and remain between $600 billion and $800 billion per year through 2028.
As we wrote, Fed holds rates as Powell signals no urgency to cut
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