Fund Manager Warns: Nearly $150 Billion in U.S. Treasury Funds to Be Moved, Bitcoin Could Drop Significantly

Golden Finance reports that on May 28th, Michael Kramer, founder and CEO of registered investment advisory firm Mott Capital Management, stated in his latest market analysis report, "Based on my experience, Bitcoin tends to reflect liquidity conditions more than most other financial instruments. If the Federal Reserve's settlement operations lead to a liquidity drain, Bitcoin's price could drop significantly."
The U.S. Department of the Treasury regularly issues bonds and bills to raise funds for government spending. When the Treasury sells new securities, it receives cash from investors, which is then transferred into the Treasury's account at the Federal Reserve. Under other conditions remaining unchanged, this process withdraws liquidity from the banking system and reduces the cash available for other investments. These regular settlements can cause temporary but significant liquidity withdrawals, especially during periods of large issuance.
Kramer pointed out that between May 28 and June 5, a series of Treasury operations will withdraw approximately $150 billion in market liquidity, with details as follows:
Thursday: Settlement of short-term Treasury bills, $15 billion
Friday: Settlement of coupon bonds, $47 billion
Monday: Bond settlement, $68 billion
Tuesday: Settlement of short-term Treasury bills, $16 billion
June 4: Estimated settlement of short-term Treasury bills, $5 to $15 billion
Various markets, including cryptocurrencies, tend to perform better when liquidity is abundant. Even a short-term tightening of liquidity can make investors more cautious, reducing their willingness to allocate to risk assets like Bitcoin.
BTC-1.59%
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