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TGA and Federal Reserve Actions Set Crypto Bulls and Bears on Collision Course Ahead of 2025

TGA and Federal Reserve Actions Set Crypto Bulls and Bears on Collision Course Ahead of 2025

Bitget-RWA2025/09/25 11:40
By:Coin World

- U.S. Treasury's TGA refill to $800B tightens liquidity for Bitcoin and risk assets, causing sideways price movement despite rising global M2 supply. - Analysts split: Raoul Pal forecasts $200K BTC/2025 if M2 correlation resumes, while Tomas warns TGA-driven liquidity drain could create bearish conditions. - Fed's 2025 rate cuts and TGA normalization may reignite crypto bull runs, but stagflation risks and $7.5T in money market funds add uncertainty. - Altcoins like Solana and Ethereum face mixed outlooks

TGA and Federal Reserve Actions Set Crypto Bulls and Bears on Collision Course Ahead of 2025 image 0

The U.S. Treasury General Account (TGA) has become a significant influence on Bitcoin’s recent price behavior, with experts discussing its potential effects on the wider crypto market heading into 2025. As the Treasury replenishes the TGA to nearly $800 billion—a level not seen in years—macroeconomic analysts note that liquidity for risk assets like Bitcoin has become more restricted. The TGA, which acts as the government’s main account at the Federal Reserve, has absorbed $500 billion in liquidity since July 2025 through bond sales, pulling capital out of markets and reducing funds available for speculative investments title1 [ 1 ]. This reduction in liquidity has played a role in Bitcoin’s stagnant price action, even as global M2 money supply—historically linked to crypto price movements—continues to grow title10 [ 6 ].

Raoul Pal, who leads Global Macro Investor, believes the liquidity crunch caused by the TGA is only temporary. He maintains that Bitcoin’s long-term path still tracks global M2 expansion, which has kept rising despite the recent disconnect. Pal projects that if the relationship with M2 resumes, Bitcoin could reach $200,000 by the end of 2025.

if the M2 trend continues title1 [ 1 ]. However, this optimistic scenario is met with doubt from analysts such as Tomas (@TomasOnMarkets), who caution that ongoing TGA replenishment may further restrict liquidity, potentially creating downward pressure on Bitcoin as the U.S. dollar strengthens title3 [ 3 ]. This ongoing debate highlights the challenges of tying Bitcoin’s price to broad economic indicators, especially as some point out that technology stocks and gold have reached new highs despite tighter liquidity title1 [ 1 ].

The Federal Reserve’s policy direction adds further unpredictability. The Fed’s rate cut in September 2025—the first since 2024—has been identified as a possible trigger for renewed liquidity, with 91.9% of traders expecting a 50-basis-point cut at the October FOMC meeting title2 [ 2 ]. Arthur Hayes from BitMEX suggests that a stable TGA and a looser monetary stance could restart Bitcoin’s upward momentum, allowing the cryptocurrency to benefit from cheaper borrowing and increased risk-taking title2 [ 2 ]. On the other hand, Tomas warns that uncertainty within the Fed about future rate decisions and the threat of stagflation could undermine this positive outlook title3 [ 3 ].

Looking beyond Bitcoin, alternative coins such as

(SOL) and (ETH) are also drawing attention for 2025. Pal points out that altcoins often outperform Bitcoin in the later stages of liquidity cycles, fueled by greater risk tolerance. Despite Solana’s recent 53% decline, he believes its correlation with global M2 suggests a possible recovery. Ethereum and are also key parts of his investment strategy, with Sui expected to surpass Solana’s performance in the near future. Still, the fate of altcoins depends heavily on macroeconomic trends and the availability of liquidity.

Traders are paying close attention to how TGA developments, Fed actions, and global liquidity interact. The TGA’s replenishment is projected to finish by late 2025, which could allow liquidity to return and support a renewed Bitcoin rally. Nevertheless, there are risks ahead. Money market funds have reached a record $7.5 trillion, with much of this capital sitting in safe assets. If investors shift toward higher-risk options, crypto prices could rise further, but this will depend on overall economic stability title2 [ 2 ]. Jamie Coutts from Real Vision forecasts that Bitcoin could exceed $132,000 by year-end if current money supply trends hold title2 [ 2 ], though others caution that unexpected geopolitical or economic events could cause volatility.

The discussion about Bitcoin’s connection to global M2 has grown more intense, with critics like TXMC questioning the reliability of the metric. He claims that inconsistencies in how countries update M2 data make the correlation between Bitcoin and M2 questionable. Despite these concerns, supporters argue that liquidity cycles remain the main force behind Bitcoin’s long-term price movements, and Pal’s model indicates the bull market could last into 2026. This extended forecast depends on continued monetary easing and a gradual, rather than rapid, market peak.

As the TGA refill process winds down and the Fed adjusts its policies, the crypto market is approaching a crucial turning point. The balance between liquidity, monetary policy, and investor risk appetite will likely determine whether Bitcoin and altcoins can take advantage of the next upward move. Investors are encouraged to keep an eye on TGA levels, Fed interest rate decisions, and global money supply patterns, while being mindful of excessive leverage and market swings title3 [ 3 ].

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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