The U.S. Treasury supplements TGA or withdraws $600 billion, putting pressure on liquidity in the crypto market.

On August 20, the Market Research Institute published an article stating that in the coming weeks, the U.S. Treasury will begin to replenish its General Account (TGA), a process that will withdraw $500–600 billion in cash from the market over approximately two months. At first glance, this seems quite normal, but the current cycle is developing into one of the weakest liquidity environments seen in the past decade.

In 2023, the $550 billion TGA supplement was buffered by over $2 trillion of Federal Reserve reverse repo tools, healthy bank reserves, and strong overseas demand for government bonds. Today, these buffers no longer exist. The Federal Reserve is still consuming liquidity through Quantitative Tightening (QT), reverse repos are nearly exhausted, banks are constrained by losses and capital rules, and overseas buyers from China to Japan have also exited. The result is that every dollar raised by the Treasury this fall will be drawn directly from active market liquidity.

High beta tokens will amplify declines when liquidity tightens. If the supply of stablecoins contracts during the TGA replenishment period, ETH and other high-risk assets may experience larger declines compared to BTC, unless there is structural capital inflow 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 and TGA rises, the crypto market may absorb shocks better than in previous cycles; if stablecoins contract, liquidity extraction will be transmitted more quickly and intensely.