The "money printer" doesn't always significantly affect the prices of risky assets; much depends on how fresh liquidity is distributed.

The issuance of U.S. Treasury bills (T-bills) has become a key liquidity indicator influencing the dynamics of digital gold. Meanwhile, the balance sheets of the Fed and other central banks play a secondary role, analysts from market maker Keyrock claim.

Impact of T-bills

According to research, a 1% change in global liquidity triggers a 7.6% movement in the price of the leading cryptocurrency in the following quarter. However, Keyrock specialist Amir Khadzhian emphasized that not all types of financial inflows affect high-risk assets equally.

Since 2021, the correlation between T-bill issuance and Bitcoin's price has reached 80%. Moreover, the issuance of government bonds serves as a leading indicator with a time lag of about eight months.

“When the Treasury increases the issuance of bills, it finances expenditures that flow into the real economy and then into risky assets like Bitcoin. If issuance falls or turns negative, this fiscal stimulus dries up,” Khadzhian explained.

The influence of T-bill issuance on Bitcoin's price compared to other liquidity-boosting methods. Source: Keyrock.

Historically, an increase in net T-bill issuance has been a leading indicator of Bitcoin's dynamics. Institutional capital and spot ETFs have reduced Bitcoin's sensitivity to liquidity changes by about 23%. Despite the ongoing correlation, the impact of macroeconomic factors on the asset has become less pronounced.

These findings contrast with the popular belief that the dynamics of digital gold primarily depend on the Fed's interest rate. Analysts expect that the global liquidity factor will fully reflect on Bitcoin's price only by late 2026 or early 2027.

The relationship between Treasury issuance and Bitcoin's price. Source: Keyrock.

U.S. National Debt Repayment and Liquidity Inflows to Markets

Keyrock analysts believe global liquidity is on the brink of significant changes. Over the next four years, a substantial portion of U.S. national debt will come due, with the total amount exceeding $38 trillion.

The U.S. Treasury will need to refinance this burden. Since a significant portion of current obligations was formed during a period of near-zero interest rates, new loans will be considerably more expensive for the department.

The dynamics of U.S. Treasury bill issuance from 2021 to 2028; analysts predict an increase in issuance rates. Source: Keyrock.

Keyrock anticipates that the U.S. will increase T-bill issuance to service the national debt. Analysts predict that by 2028, the annual issuance volume could stabilize at $600 billion to $800 billion.

It's worth noting that the latest inflation data in the U.S. temporarily revived Bitcoin's price.