I have been following the news of the U.S. Treasury refunding announcement closely, and it could potentially be a game changer for Bitcoin and other risky assets.
I will discuss why this announcement is important and how it can trigger a bull run in Bitcoin.
The current estimate of the US Treasury General Account (TGA) is $750 billion. If this estimate is not revised or lowered, it might cause Bitcoin to rise alongside other risky assets.
Why? Well let me explain.
If the TGA estimate stays as it is or declines, that means there will be lesser pressure on markets through Treasury issuance. This could create more market liquidity which would support risk-on assets such as Bitcoin.
Bitcoin might become an alternative asset for investors when Treasury issuance decreases competition. This move may likely boost the demand for Bitcoin thus initiating a bull run.
The price of assets such as Bitcoin is largely influenced by market sentiment. Investors’ confidence in risk assets could grow due to a lower TGA estimate if they perceive it positively.
In addition, the lower TGA estimate could imply that there is more money in circulation. Risky assets including Bitcoin may therefore get a lift from this injection of liquidity.
During times of economic uncertainty, people tend to invest in Bitcoin as a way of safeguarding against inflation and currency devaluation.
If a lower TGA estimate signifies uncertain economic conditions, more investors will choose to put their money into Bitcoin which is considered as safe haven asset.
You might ask why I chose to mention Bitcoin among other things. This is because the digital currency has gained popularity as an investment channel and hedge against conventional financial assets.
The deflationary characteristic of Bitcoin is one of its major features. There will only be 21 million Bitcoins ever produced hence making it a deflationary asset.
The limited supply makes it a good store of value during inflation or currency devaluation periods.
Over the past few years, many corporations and institutions have started investing in cryptocurrencies such as BTC.
When these big players adopt this new form of money, they bring with them credibility which leads to higher prices; thus institutionalizing bit coin as an asset class itself.
It is increasingly being recognized worldwide both as means for transactions purposes and stores values too.
Today you can pay with bitcoins in companies like Tesla or use PayPal services for buying them thus raising awareness on their usefulness besides driving up demand levels accordingly.
Blockchain, the technology that Bitcoin operates on could change how we carry out transactions and keep money. Bitcoin’s value will increase as blockchain technology grows.
Bitcoin is not bound by any country or government; it’s global. In times of economic instability, the worldwide demand for this digital asset may cause its price to surge.
I think that the refunding notice from the US Treasury might set off a bull market for Bitcoins.
If there is a lower TGA estimate then this should generate more liquidity as well as positive sentiment which would lead to increased demand for risk assets such as bitcoins.
No one can tell what will happen in future but everything indicates that given the current economic climate bitcoins are likely going to gain significantly. That said make sure you research properly before investing your money into anything.