The Bitcoin Layer Global Macro Update: Liquidity Cycles Higher While Bitcoin Consolidates
7 snips
Jul 25, 2025 The discussion dives into how the end of quantitative tightening is enhancing liquidity in financial markets and supporting Bitcoin's foundation. There’s a focus on the rise of Treasury bill issuance and its implications for banking stability. The breakdown of the dollar index and its connection to U.S. industrial policy is highlighted. On the Bitcoin front, topics include six-figure price consolidation, decreasing volatility, and favorable on-chain signals, painting a picture of strength amid evolving macro conditions.
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Treasury Bills Boost Liquidity
- Treasury bills as a percentage of total marketable U.S. debt affect liquidity and credit expansion directly.
- Increasing bills expands banking system liquidity without adding long-term risk to banks' balance sheets.
Treasury Supply and Scarcity
- Maintaining stable overall treasury debt issuance creates scarcity, supporting treasury prices and liquidity.
- Treasury opts to increase bills over coupons to keep supply stable amid large deficits.
Fed's Artful Liquidity Management
- The Fed tapered QT at the right time, keeping reserves steady while reducing balance sheet size.
- This maintained liquidity in repo markets, the 'plumbing' essential for stable treasury and banking operations.
