The recent downturn in Bitcoin is not only due to Jerome Powell's speech at Jackson Hole but primarily stems from the U.S. Treasury withdrawing $400 billion in liquidity from the system.
The U.S. Treasury is recreating the Treasury General Account, causing significant liquidity pressure on the financial market, from cryptocurrencies to stocks, having a much broader impact than statements from the Fed.
MAIN CONTENT
The U.S. Treasury withdrew $400 billion in liquidity, negatively affecting Bitcoin and the financial market.
Jerome Powell's speech is an external reason; liquidity is actually the key cause.
The liquidity cushion of 2023 is no longer available, making the current bearish wave strong and prolonged.
How does the U.S. Treasury operate its bank accounts?
The Treasury General Account (TGA) is the U.S. government's savings account; when the Treasury spends, it puts money back into the market, increasing liquidity.
When the Treasury recreates this account, they sell bonds and withdraw money from the system, expected to raise $500–600 billion in the coming months, creating a rare significant liquidity pressure in recent history.
How is Bitcoin pressured by this event?
Bitcoin has dropped over 8%, from a peak of more than $124,000 to nearly $113,500, while Ethereum, XRP, and Solana also declined, with the stock market like Nasdaq falling nearly 1.4%.
Investor margin positions faced liquidations of over $270 million in the past 24 hours, with $170 million in Ethereum and $104 million in Bitcoin. Most liquidations were Long positions, reflecting a high sensitivity to market fluctuations of 2–3%.
Jackson Hole and PPI data are merely excuses for the market to reduce risk ahead of the U.S. Treasury's withdrawal of $400 billion in liquidity in the coming weeks.
David Duong, Coinbase expert, 2024
How did Jerome Powell's speech differ from the liquidity effects of the Treasury?
While Jerome Powell can create volatility, the actual liquidity withdrawal is the main reason causing turmoil in the financial and cryptocurrency markets.
The likelihood of the Fed cutting interest rates in September has decreased significantly, but market sentiment is not entirely pessimistic. Bitcoin is assessed to have a 21% chance of reaching $100,000 in September, while Ethereum has a 60% chance of maintaining above $4,000.
Why is the liquidity impact stronger this time than before?
Unlike 2023, when banks and the Fed still had liquidity cushions, by 2025 these cushions had been exhausted. Demand for U.S. bonds from abroad has also significantly decreased.
According to Marcus Wu from Delphi Digital, this situation makes recreating the Treasury's general account highly disruptive and has a broader impact on the market than before.
The U.S. Treasury's withdrawal of a large amount of cash significantly affects the current market more than previous liquidity tightening episodes.
Marcus Wu, Delphi Digital, 2024
Frequently Asked Questions
How does the U.S. Treasury's withdrawal of money from the market affect Bitcoin?
This reduces liquidity, causing selling pressure, leading to significant declines in Bitcoin and many other risky assets.
Is Jerome Powell the main reason for the recent downturn?
Powell's speech creates sentiment but is not the main cause; the liquidity crisis due to the Treasury is the underlying reason.
How has the liquidity of the financial system changed from 2023?
In 2023, there were many backup sources like bank reserves and the Fed; by 2025, these sources had significantly depleted.
Why were margin positions heavily liquidated in Bitcoin and Ethereum?
A 2–3% fluctuation triggered the liquidation of nearly 95% of Long positions, reflecting that the market is currently very sensitive to small fluctuations.
Can Bitcoin recover to nearly $124,000 in the near future?
This possibility may remain low until market liquidity is pumped back in accordance with new policies.
Source: https://tintucbitcoin.com/bitcoin-sut-duoi-114-nghin-usd/
Thank you for reading this article!
Please Like, Comment, and Follow TinTucBitcoin to stay updated with the latest news about the cryptocurrency market and not miss any important information!
