The test of $600 billion: Can the crypto market survive TGA recoup?

author:StacyTranslation: Shan Oppa, Bitchain Vision

The U.S. Treasury’s upcoming $500 billion to $600 billion in cash reposses are at a fragile market moment.This will remove liquidity from the market and first influence cryptocurrencies through stablecoins.Why is this important?

What’s going on: TGA Account Recovery Explanation

The U.S. Treasury Department keeps its main cash account in the Federal Reserve, which is calledMinistry of Finance Regular Account (TGA), it works similar to a government’s current account.

When the balance is too low, the Ministry of Finance must passMore debts sold(usually short-term Treasury bills)Recover the account.Investors use cash to buy these Treasury bills, and this portion of the cash will leave the financial system and flow into the TGA account.

It can be understood as this: If a company suddenly raises a lot of money by selling bonds and investors give up cash in order to buy these bonds, then the funds available for consumption elsewhere will be reduced.The same thing happened here, but the scale reached the trillion-dollar level.

This is important because it temporarily removes liquidity from the market.In 2023, when the Treasury conducted massive cover, its impact was tempered by some security buffering mechanisms: banks had more additional reserves, foreign investors were still buying, and money market funds pulled more than $1 trillion from the Fed’s overnight reverse repurchase tool (RRP).This means that the market has little awareness of liquidity loss.

And in2025The Ministry of Finance will followWithin 2 to 4 monthsReissue$500 billion to $600 billionNew debt to rebuild TGA accounts to approx.$850 billion.But this time, most buffering mechanisms have disappeared.That’s why Delphi calls this cycle “Fragile” Reason.

Why is this time more vulnerable than 2023

The market’s ability to absorb new treasury bonds has become weaker because:

• The Fed is still pulling out liquidity: The Federal Reserve is making monthly appointments$60 billionThe speed of shrinking its balance sheet, which draws cash from the system.

• RRP cushion has disappeared: This once Gundam2 trillion USD “Shock Absorber”, now almost empty (about $29 billion).It’s like your savings account is being used to pay past bills, and when new expenses come, you’re no longer buffering.

• Foreign buyers have retreated: Since 2021, China and Japan haveCut hundreds of billions of dollarsU.S. Treasury bond holdings.They are still buying short-term Treasury bonds, but no longer buying large quantities of long-term Treasury bonds.

• Banks are under pressure: Due to stricter regulation$482 billionThe unrealized bond loss has left banks with little room to buy more Treasury bonds.

• Global reserves are shifting: Central banks are diversifying their reserves,Reduce US dollar holdings(The share of US dollar in reserves has dropped to about58%), instead buy moregold.

All in all, this meansTGA Account Recovery in 2025 will draw liquidity directly from active markets, making it difficult for both traditional markets and cryptocurrency markets to remain strong.

How will this impact the market, especially cryptocurrencies

In traditional markets, recoup usually meansShort-term lending costs rise(Repurchase rate, Treasury bond yield), which will make investors more cautious.

butCryptocurrencies respond fasterbecause it relies heavily onStable Coin.Stablecoins are like the “cash track” of cryptocurrencies: when their supply grows, cryptocurrencies have more fuel; when supply shrinks, the upward momentum stagnates.

• 2021, When the buffering mechanism is sufficient, the supply of stablecoin has increased16%, the cryptocurrency price is maintained.

• 2023, When the buffer mechanism decreases, the supply of stablecoin decreases4.15%,ETH fell by about 13%,althoughBTCPrices remain stable.

• 2025, In the event that the buffer mechanism is almost gone, the stablecoin supply mayShrink faster, and this pressure will first appear in cryptocurrencies.BTCProbably perform better (as it is considered the **’safer’** cryptocurrency), butETH and altcoinsThere may be a more drastic decline.

Here is a new twist:Stablecoins themselves are now the big buyer of Treasury bills.

• Tether and Circle hold more than$120 billionTreasury bills.

• pictureUSD1Such a new compliant stablecoin is designed to purchase government debt when minting new tokens.For example, if an institution buys $100 million in USD1, the money will go directly to the Treasury bill market.

In the long run, this could recirculate some of the funds drawn by the Treasury back into the cryptocurrency market.But for now,These funding flows are not enough to offset the $500 billion to $600 billion in recoupon size.

Possible timeline

Delphi believes that this replenishment may be divided intoFour stages:

1. Late summer (August to early September): The market remains strong, similar toCalmness before the storm.

2. Mid-late September (around the FOMC meeting on September 16-17): If the issuance of treasury bonds is concentrated in the previous period, it will enterOscillation period.Liquidity tightened rapidly and risky assets fell.For example, Treasury auctions may suddenly increase yields, putting pressure on leveraged positions.

3. End of September to November:EnterFatigue period, stablecoin supply and trading volume shrink.Cryptocurrencies may perform poorly during this period, especially altcoins.

4. December to January 2026: Once the TGA target is achieved and the issuance of Treasury bonds slows down, the pressure will be alleviated.If the stablecoin supply expands again, risky assets mayrebound in the new year.

My opinion

This time, TGA account reimbursementMore risky than most people expect,becauseRRP’s security net has disappeared.Now every dollar raised is drawn directly from market liquidity.

Cryptocurrency will beEarly warning system.ifStablecoins shrink in September, that would be a clear red alert, even before the stock or bond markets showed pressure.

The “level” of the market will remain unchanged:

• Under pressure:BTC > ETH > Altcoin(BTC performs best).

• In recovery: If stablecoin capital flows and ETF capital inflows can be supported,ETH > BTC > Altcoin.

My basic judgment is,September to NovemberIt will be a turbulent period, and then if Treasury issuance slows down and stablecoins stop shrinking,End of the yearThere will be aBetter layout timing.