【Analysis: The U.S. Treasury will withdraw $500–600 billion in cash from the market over the next two months, making market liquidity even more fragile】On August 20, Delphi Digital Market Research Institute reported that in the coming weeks, the U.S. Treasury will begin replenishing its General Account (TGA), a process that will extract $500–600 billion in cash from the market over approximately two months. At first glance, this seems quite ordinary, but the current cycle is developing into one of the most fragile liquidity environments in the past decade. In 2023, the $550 billion TGA replenishment was buffered by over $2 trillion in Federal Reserve reverse repos, healthy bank reserves, and strong overseas demand for Treasury bonds. Now, these buffers no longer exist. The Federal Reserve is still consuming liquidity through Quantitative Tightening (QT), reverse repos are nearly depleted, banks are constrained by losses and capital rules, and overseas buyers from China to Japan have also exited the market. The result is that every dollar raised by the Treasury this fall will be taken directly from active market liquidity. High-beta tokens will amplify declines during liquidity tightening. If stablecoin supply contracts during the TGA replenishment, ETH and other high-risk assets may experience larger declines compared to BTC, unless there are structural inflows from ETFs or corporate treasuries. In a weak liquidity environment, position management and capital rotation across the risk curve are more important than ever. If stablecoins expand while the TGA rises, the crypto market may absorb shocks better than in previous cycles; if stablecoins contract, the liquidity withdrawal will transmit faster and more intensely.
