One fund manager has issued a stark warning: Bitcoin’s ongoing selloff may deepen as upcoming U.S. Treasury operations are expected to drain roughly $150 billion in liquidity from the financial system.
“In my experience, Bitcoin tends to be a better liquidity indicator than most other instruments. If the Treasury settlements are a drain on liquidity, then Bitcoin could be heading much lower,” said Michael Kramer, founder and CEO of Mott Capital Management, a registered investment advisory firm, in his latest market analysis note.
The U.S. Treasury regularly issues bonds and bills to finance government spending. When the Treasury sells new securities, it receives cash from investors, which is then moved into the Treasury’s account at the Federal Reserve. All else equal, this process pulls liquidity out of the banking system and reduces the amount of cash available for other investments. These periodic settlements can create temporary but meaningful liquidity drains, especially during heavy issuance periods.
According to Kramer, Treasury operations from May 28 to June 5 could result in a roughly $150 billion liquidity drain. This includes:
- $15 billion in T-bills settling on Thursday
- $47 billion in coupon settlements on Friday
- $68 billion on Monday
- $16 billion in T-bill settlements on Tuesday
- Another T-bill settlement on June 4 estimated between $5 billion and $15 billion
Markets, including crypto, tend to perform best when liquidity is abundant. When cash is pulled from the system, even temporarily, investors often turn more cautious, reducing appetite for risk assets like bitcoin.
Early signs of this pressure are already visible. Bitcoin has dropped about 11% since hitting highs above $82,500 earlier this month and was trading near $73,000 at press time. Kramer notes that the recent breakdown of key support near $75,000 is a clear signal that liquidity conditions are tightening.
While this doesn’t guarantee a deeper decline, it underscores an important point often overlooked in crypto circles: Bitcoin does not trade in a vacuum and macro forces like government borrowing and the resulting cash flows can quietly exert significant influence on prices.
For everyday investors, the key takeaway is simple. Sometimes the biggest driver of Bitcoin’s price isn’t a crypto-specific headline, it’s macro forces moving in the background.