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According to former BitMEX CEO Arthur Hayes, battles over the US debt ceiling create clear cash swings that move markets. When the Treasury spends down its main checking account — the Treasury General Account, or TGA — new dollars enter the system and lift risky assets.
Later, when the Treasury refills the TGA by selling debt, cash is pulled back out and pressure returns to stocks and crypto, he said.
Hayes points to 2023 as a clear example, when a large pool of funds at the Fed’s reverse repo facility — about $2.5 trillion — was available to be drawn back into markets.
Market Metrics And Recent Moves
Traders can see the effects in price action. Bitcoin’s recent fall toward the $80,000 area followed a stretch of tighter liquidity, and the rebound to above $91,000 has many investors asking whether the sell-off marked a cycle low.
The crypto market gained ground Monday, with total capitalization rising to a little over $3 trillion, up 1.2% in the last 24 hours. Bitcoin climbed to $92,120, a 1.50% increase on the day and almost 6.5% higher over the week.
Ethereum traded around $3,160 after a 4% daily rise and an 11% weekly jump. Reports have disclosed that these moves come as traders watch big-dollar flows tied to US Treasury operations and central bank balance sheet moves.
Smaller gains in the last day sit against larger weekly returns for several top tokens, showing that swings remain wide but that buying interest has reappeared.
Why 2025 Looks Different
Based on reports, Hayes says 2025 is not the same as 2023. The reverse repo balances that helped fuel the earlier rally are largely gone, and liquidity tightened by almost $1 trillion between July and late 2025 as the Treasury issued debt and the Fed ran quantitative tightening.
That drought of available cash was a headwind for risk assets and helped push prices lower. The mechanics are simple: less cash chasing assets tends to reduce bids and widen price drops.
Price Reaction And Cross-Market Effects
The liquidity story is not limited to crypto. Stocks, gold, and property responded to the same flow shifts during the prior cycle.
Hayes estimates that about $2.5 trillion of liquidity was effectively redeployed from Fed facilities into markets in 2023, amplifying gains across asset classes. When that source was absent in 2025, selling pressure intensified and volatility rose.
Favorable Market Conditions
Hayes says the environment has shifted in a positive way. The Fed has put quantitative tightening on hold, liquidity pressure in the Treasury market is calming down, the TGA is close to where officials want it, and banks are starting to open up their lending taps again.
He views the slide toward $80,000 as the cycle low and expects upward pressure as cash conditions improve. According to his view, these factors together create the environment for renewed upside.
Featured image from Unsplash, chart from TradingView
