TLDR
- Arthur Hayes attributes Bitcoin’s recent price drop to a $300 billion reduction in U.S. dollar liquidity.
- The U.S. Treasury’s increase in its General Account balance has pulled liquidity from the market, affecting Bitcoin’s price.
- Hayes believes Bitcoin’s decline is a result of broader macroeconomic conditions rather than a crypto-specific issue.
- The tightening of liquidity has affected other speculative assets, with capital rotating toward safer investments like gold and silver.
- Hayes points out that reduced liquidity and higher risk aversion have led to a decline in Bitcoin futures open interest.
Arthur Hayes, the former CEO of BitMEX, recently stated that the sharp decline in Bitcoin’s price is closely linked to a significant fall in U.S. dollar liquidity. Hayes pointed to a reduction of around $300 billion in U.S. dollar liquidity over recent weeks as a major factor. He explained that the liquidity squeeze has come mainly from an increase in the U.S. Treasury General Account (TGA), which he believes could be a preparation for potential government shutdowns.
Liquidity Squeeze Pressures Bitcoin’s Price
Hayes highlighted that the U.S. government has recently increased its TGA balance by approximately $200 billion. This move has pulled liquidity from the market, which in turn has contributed to the decline in Bitcoin’s value. According to Hayes, this drop in liquidity is not a crypto-specific issue but a macroeconomic one tied to broader financial conditions.
The decrease in liquidity has caused a ripple effect across risk assets like Bitcoin, which is highly sensitive to liquidity changes. With the tightening of dollar liquidity, Bitcoin’s price has mirrored these broader market trends. “Bitcoin’s decline is unsurprising given the sharp fall in dollar liquidity,” Hayes wrote on X, emphasizing the connection between financial conditions and Bitcoin’s market performance.
Roughly $300bn fall in $ liq over past few weeks driven mostly by $200bn rise in TGA, gov could be raising cash balances to fund spending in case of shutdown. $BTC falling not a surprise given the fall in $ liquidity. pic.twitter.com/ctPjWd8188
— Arthur Hayes (@CryptoHayes) January 30, 2026
TGA and U.S. Dollar Liquidity’s Impact on Markets
The TGA is the primary cash account held by the U.S. Treasury at the Federal Reserve, and an increase in its balance tends to reduce liquidity in the financial system. Hayes suggested that the government could be raising cash reserves to prepare for a potential shutdown, ensuring continued federal spending even if budget talks falter. The liquidity squeeze, reflected in the USDLIQ index, which tracks overall dollar liquidity, has dropped nearly 7% in the past six months.
Hayes’ observations are in line with broader market data, which shows a tightening of liquidity that has weighed heavily on speculative assets, including Bitcoin. As liquidity falls, there is a reduction in leverage, leading to higher risk aversion among investors. Consequently, funds have rotated towards more stable investments such as gold and silver, while Bitcoin has struggled to attract new capital inflows.
