How the U.S. Debt Ceiling Influences Bitcoin and Market Liquidity – BitRss

The U.S. government has reached its $36 trillion debt ceiling, exhausting its borrowing limit. This development affects the global economy and is closely monitored in the cryptocurrency market. Treasury Secretary Janet Yellen noted that the debt ceiling does not permit new spending, yet poses risks to meeting existing obligations. She announced on Tuesday that “extraordinary measures” will be taken, which could last until mid-March.

Assessing the Impact of TGA Spending on Markets

In the event the Treasury reaches its debt ceiling, the General Treasury Account (TGA) may come into play. The TGA is an account used to finance government operations. Spending from this account increases liquidity, strengthening the reserves of commercial banks. Enhanced reserves boost banks’ lending capacity and stimulate investment in financial markets, especially benefiting risky assets.

Recent debt ceiling crises have shown that declines in the TGA often coincide with increases in Bitcoin