Arthur Hayes
Arthur Hayes 1 minutes reading from Bitcoin

8 Reasons Why the US Treasury is thinking about Bitcoin

1/ Guess who is pumping BTC and ETH

2/ The US Treasury is thinking about supplying the market with more short term T-bills to alleviate a shortage.

3/ Money Market Funds like short term T-bills, but there ain't enough so they park their money in the Fed's reverse repo facility. It earns a similar yield. Credit risk is also a factor, but let's keep this simple for twitter.

4/ Money in RRPs is dead money that cannot be leveraged by the banking system. Money in T-bills is ALIVE and can be leveraged to pamp risky financial assets.

5/ There is 2.2 trillion sitting in RRP, if that number goes down BOOM BABY BOOM! Let's Fucking Go, Lambo's for errbody!

6/ RRP balances are slightly down over the last month, but the market is clearly anticipating this buy back operation to push RRP balances much much lower.

7/ And this is why everything that depends on liquidity is ripping hard to the upside.

8/ These buy backs and re-issues of new on-the-run T-bills have not actually happened yet. If this is just a trial balloon and it pops, make sure to put on your adult diaper for the reversal.

This post is based on this twitter thread.

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