Some issues never go away, and the US debt ceiling, which limits the maximum amount the government can borrow, is one of them. It is back in the spotlight, but past experience suggests it could be positive for Bitcoin (BTC) and risk assets in general.
US You will arrive Its debt limit of nearly $36 trillion was set Tuesday, meaning it cannot borrow more from the public to fund its operations.
“The debt limit does not allow for new spending, but it does create a risk that the federal government may not be able to fund its existing legal obligations that Congress and presidents of both parties have made in the past,” outgoing Treasury Secretary Janet Yellen said. that Official announcement Friday.
The mere thought that the world’s largest economy is unable to borrow more may spook investors, but note that a default and government shutdown will not happen immediately. Yellen said the Treasury Department would implement “extraordinary measures” starting Tuesday, allowing time at least until March 14.
One possible measure would be to drain the Treasury General Account (TGA), the government operating account at the Fed used to collect taxes, duties, proceeds from the sale of securities, and public debt receipts while facilitating government payments.
The previous debt ceiling episode in early 2023, which included the use of TGA to cover expenses, positively impacted risk assets, including Bitcoin.
This is because when the government spends the TGA balance, the cash goes into the bank accounts of various entities, such as contractors, employers and others, at commercial banks. This enhances the amount of reserves held by commercial banks. With more reserves, they have a better ability to lend money, which may lead to increased lending or investment in the broader economy and financial markets.
As of Monday, the Treasury’s general account balance was $677 billion.
The chart shows the price of Bitcoin along with changes in the Treasury General Account (TGA) balance over the past five years.
It is worth noting that TGA withdrawals often coincided with Bitcoin price rises, suggesting an inverse relationship between the two.
