Key Points

• The U.S. is expected to reach its $36 trillion debt ceiling on Tuesday.
• The Treasury plans to implement extraordinary measures, which may include reducing the balance of its Treasury General Account (TGA).
• Past instances of TGA reductions have historically benefited risk assets like Bitcoin (BTC).

Quotes

“The debt limit does not authorize new spending, but it creates a risk that the federal government might not be able to finance its existing legal obligations…” – Janet Yellen

“This move could benefit Bitcoin and other assets, as cash flowing out of the TGA can increase lending capacity within the economy.”
(Translation: This move could positively impact Bitcoin and other risk assets, as it injects more cash into the economy.)

Analysis

Some issues persist over time, and the U.S. debt ceiling is a notable example. Historically, these situations prompt market concern but often lead to positive outcomes for assets like Bitcoin. The Treasury stated they can manage until at least March 14 before potential defaults.

Conclusion

The current balance in the TGA stands at $677 billion. Observations show that reductions in the TGA often align with bullish trends in Bitcoin’s price.