T-Bills Primary Force Behind BTC’s Price Action, Not Fed Policy — Report
New Keyrock research finds not all newly created money impacts risk assets due to how fresh liquidity flows through the economy.
Treasury bill issuance is the primary liquidity metric that impacts Bitcoin’s (BTC) price and not the Federal Reserve or any other central bank’s balance sheet, according to a new report from crypto investment firm and market maker Keyrock.
Every 1% change in global liquidity levels impacts BTC’s price by 7.6% the following business quarter in which new money is created. However, not all liquidity impacts risk asset prices equally, Keyrock researcher Amir Hajian said.
Treasury bill issuance has about an 80% correlation with BTC prices since 2021, and this metric leads BTC prices by about eight months, according to the report. The author wrote:
“When the Treasury ramps up Treasury bill issuance, it is financing spending that flows into the real economy, and eventually into risk assets like Bitcoin. When Treasury bill issuance falls or turns negative, that fiscal tailwind fades.
Historically, rising net treasury bill issuance has exhibited a leading statistical relationship with Bitcoin returns,” the report continued.
Despite this high correlation, institutions and exchange-traded funds (ETFs) have dampened Bitcoin’s sensitivity to liquidity conditions by about 23%.
The analysis contradicts the widespread theory that interest rate policy set by the Federal Reserve is the primary driver of liquidity impacting risk asset prices and forecasts that global liquidity will impact BTC prices in late 2026 and early 2027.
Related: Bitcoin passes $69K on slower US CPI print, but Fed rate-cut odds stay low
Looming wall of US debt maturity means more liquidity is coming
Global liquidity is at an “inflection” point, Keyrock’s report said, adding that a large swath of the $38 trillion US national debt is maturing over the next four years.
This means the US Treasury will have to refinance the debt at higher interest rates, much of which was financed under near-zero interest rates.
The US will likely ramp up Treasury bill issuance to roll over the debt, the Keyrock analyst said.
“T-bill issuance is projected to reach and sustain $600 billion to $800 billion per year through 2028,” the Keyrock report said.
Magazine: Is China hoarding gold so yuan becomes global reserve instead of USD? 8 min