After years of navigating the crypto world, I've seen too many "black swan" events that instantly turn the tide. Recently, the US Treasury announced plans to issue $125 billion in government bonds, plus an additional $40 billion in corporate bonds, causing market liquidity to tighten instantly. Many newcomers started to wonder: if this move suppresses market liquidity, could it also drag down crypto assets? Today, I'll break down this logic in the simplest way and share some practical strategies I've summarized from real-world experience.

**Why does US debt issuance affect the crypto market? Focus on three key points**

The first phenomenon is straightforward—liquidity is being "siphoned off," and risk assets immediately come under pressure. When the US issues government bonds, it essentially absorbs funds from the entire market. For example, in November 2025, due to account balance issues, the Treasury issued a concentrated $163 billion in short-term bonds over three days, instantly freezing $120 to $140 billion in liquidity. During that period, Bitcoin dropped over 6% within 30 minutes because funds tend to withdraw from high-risk assets like cryptocurrencies and shift into safer government bonds.

To illustrate more clearly: the market is like a water reservoir. US debt issuance is akin to suddenly opening a spillway, causing the water level to drop rapidly. When the water in the reservoir decreases, everything floating on the surface tends to sink. Crypto assets, like small sailboats, are naturally the most affected and sway the most.

The second pressure comes from chain reaction liquidations, with smaller tokens bearing the brunt. When liquidity tightens, the fragile structure within the crypto space gets amplified infinitely. The October 2025 liquidation wave is a typical example—due to chain reactions, the spot price of a certain stablecoin on a major exchange once plummeted to $0.65, even though on-chain it was still anchored near $0.99. Such a large price gap plainly exposes a problem: small tokens lack sufficient market depth, and when someone starts selling, prices can collapse uncontrollably.

The third hidden risk is the cross-market fragility of risk assets. When macro liquidity becomes tight, arbitrage mechanisms between exchanges fail, causing prices across platforms to diverge significantly. Large funds tend to withdraw in such situations, while retail investors often get caught in the middle.

**How to understand the market’s rhythm at this stage?**

The core logic is: US debt issuance → market liquidity declines → selling pressure on risk assets increases → leveraged positions are forced to liquidate → liquidity in small tokens dries up → prices collapse. This forms a complete causal chain.

But this doesn’t mean the crypto market will completely crash. Historically, each similar shock has been followed by a rebound after adjustment. The key is whether you can survive this time window and whether you’ve anticipated the risks and prepared in advance.

**Three practical strategies for dealing with this**

First, keep your positions light during tense periods. When macro liquidity deteriorates, full positions will inevitably lead to losses. Reduce leverage and position sizes to leave room for reaction. Even if the market drops 20% or 30%, a light-position account can withstand the pressure.

Second, prioritize holding top-tier coins. Under the impact of US debt issuance, funds tend to cluster together. Bitcoin and Ethereum, with their deep liquidity, often become relatively safe havens. Small tokens are the first to be abandoned, with risks far outweighing potential gains.

Third, pay attention to macro news signals. Information like US Treasury bond plans and central bank liquidity injections are early warning signs. Monitoring these data points in advance can help you adjust your positions earlier than most.

Crypto market volatility never appears out of thin air; it’s always supported by macroeconomic logic. Grasping this connection can save you a lot of lessons learned the hard way.