T‑Bills, Not the Fed, Are Driving Bitcoin’s Recent Moves, New Research Shows
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A freshly released study from crypto‑focused investment house Keyrock challenges the widely held belief that the Federal Reserve’s balance‑sheet actions are the main source of liquidity for risk assets such as Bitcoin (BTC). Instead, the report argues that the United States Treasury’s issuance of short‑term debt – specifically Treasury bills (T‑bills) – has a far stronger and more predictive relationship with Bitcoin’s price dynamics.
The thesis
Keyrock’s analyst team, led by senior researcher Amir Hajian, examined how fresh money created in the global financial system propagates into the crypto market. Their central claim is that newly issued Treasury bills act as the primary conduit for liquidity that eventually reaches Bitcoin, while conventional monetary‑policy tools—such as the Fed’s interest‑rate adjustments or balance‑sheet expansions—play a secondary role.
Key findings
| Metric | Result |
|---|---|
| Correlation (2021‑present) | Treasury‑bill issuance tracks Bitcoin price movements with roughly 80 % correlation. |
| Lead time | The correlation is forward‑looking: rises (or falls) in T‑bill supply tend to precede Bitcoin price changes by about eight months. |
| Liquidity elasticity | A 1 % shift in global liquidity translates to an average 7.6 % movement in Bitcoin’s price in the following business quarter. |
| Institutional dampening | The growth of Bitcoin‑focused ETFs and other institutional products appears to reduce the asset’s sensitivity to liquidity shocks by roughly 23 %. |
| Future issuance outlook | Projections place annual Treasury‑bill supply at US$600‑800 billion through 2028, driven by the need to refinance a large portion of the ≈US$38 trillion national debt that is maturing over the next four years. |
The report underscores that when the Treasury ramps up T‑bill issuance, the additional funding typically flows into government spending, which then permeates the broader economy and ultimately fuels demand for risk‑on assets, including Bitcoin. Conversely, a contraction in bill issuance removes that fiscal “tailwind,” softening price momentum.
How this differs from traditional narratives
For years, analysts have pointed to the Federal Reserve’s quantitative‑easing (QE) programs and changes to the federal funds rate as the chief drivers of crypto‑market liquidity. Keyrock’s analysis suggests that the Fed’s balance‑sheet movements have a comparatively muted impact on Bitcoin’s price path, especially when measured against the more direct fiscal channel represented by Treasury‑bill issuance.
The research also highlights a structural shift: the growing presence of Bitcoin ETFs and other institutional vehicles has begun to decouple the cryptocurrency’s price from pure liquidity swings, making its response smoother but also less pronounced.
Implications for market participants
- Investment timing – Traders who monitor Treasury‑bill supply data could gain a predictive edge, given the eight‑month lead the metric appears to provide.
- Risk management – Portfolio managers may want to reconsider the weight they assign to Fed policy versus fiscal policy when modelling crypto‑exposure risk.
- Policy monitoring – The upcoming wave of debt roll‑overs could exert upward pressure on T‑bill issuance, potentially setting the stage for renewed Bitcoin price appreciation in the late‑2026 to early‑2027 window outlined by the report.
- Institutional influence – As more capital flows into Bitcoin through regulated products, the asset’s volatility may further soften, reducing its utility as a pure “liquidity barometer.”
Outlook
Keyrock forecasts that T‑bill issuance will continue to rise throughout 2024 and remain at elevated levels through 2028 as the Treasury seeks to refinance a substantial fraction of maturing debt at higher interest rates than those prevailing during the pandemic‑era QE period. This anticipated surge in fiscal‑driven liquidity could reignite Bitcoin’s price upside, provided broader macro‑economic conditions remain conducive.
The study cautions, however, that the global liquidity environment is at an inflection point. A slowdown in Treasury‑bill growth or a reversal of fiscal stimulus could curtail the upward pressure on Bitcoin, especially if institutional demand does not offset the contraction.
Key takeaways
- Treasury bills, not Fed balance‑sheet actions, exhibit the strongest statistical link to Bitcoin price movements (≈80 % correlation, 8‑month lead).
- Every 1 % change in global liquidity translates to a 7.6 % move in Bitcoin the following quarter, highlighting the asset’s high elasticity to fresh money.
- Institutional products have begun to blunt Bitcoin’s responsiveness to liquidity swings, reducing sensitivity by about a quarter.
- Projected T‑bill issuance of US$600‑800 bn/year through 2028 could reignite price gains, aligning with a forecasted liquidity‑driven rally in late 2026‑early 2027.
- Market participants should track Treasury‑bill supply alongside traditional monetary‑policy metrics to better anticipate Bitcoin’s price trajectory.
The analysis draws on data compiled by Keyrock and is presented for informational purposes. Readers are advised to conduct independent research before making investment decisions.
Source: https://cointelegraph.com/news/treasury-bills-primary-driver-bitcoin-price?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
