Matrixport： Bitcoin's rise may face short-term pressure, investors should pay attention to the issuance policy of the US Treasury Department

BlockBeats News: On February 21st, Matrixport released its weekly report "How Liquidity and Macroeconomic Indicators Affect Bitcoin": "During the tenure of Treasury Secretary Janet Yellen, the US Treasury Department adjusted its debt issuance strategy, preferring short-term Treasury bills (T-bils) over long-term bonds. Due to the small number of long-term bonds issued, the yield of treasury bond remained stable, reducing the attractiveness of fixed income assets and driving investors to turn to high-yield options such as Bitcoin and stocks. The additional liquidity enhances risk appetite, further supporting the bullish momentum of Bitcoin. However, with Scot Bessent taking over the Ministry of Finance, this strategy may be reversed. Resuming the issuance of more long-term bonds may increase yields, tighten liquidity, and weaken demand for risky assets. If financial conditions tighten, Bitcoin's recent rally may face pressure. Investors should closely monitor the issuance policy of the Ministry of Finance, as it is a major driver of liquidity and market sentiment The US Dollar Index (DXY) is another major macroeconomic factor that affects the volatility of Bitcoin prices. DXY measures the strength of the US dollar relative to a basket of foreign currencies. The stronger the US dollar, the tighter the global liquidity, and the lower the attractiveness of risky assets such as Bitcoin Inflation data also plays an important role in influencing the price trend of Bitcoin. The Consumer Price Index (CPI) and Personal Consumption Expenditure (PCE) are key inflation indicators that the Federal Reserve focuses on. The lower than expected CPI data indicates that inflation is cooling down, which may prompt the Federal Reserve to adopt a more hawkish policy stance. This in turn will increase market liquidity and risk appetite, creating a bullish environment favorable to Bitcoin Another key macro indicator is the (global) money supply (M2), which measures the total amount of money circulating in the economy, including cash, deposits, and other current assets. When M2 expands, the liquidity of the financial system increases, leading to an increase in investment capital. This excess liquidity typically leads to an increase in investors' risk appetite, driving up demand for risky assets such as Bitcoin. On the contrary, when M2 contracts, liquidity tightens and speculative investments encounter difficulties. At the end of 2023, M2 supply will stop shrinking, helping Bitcoin break through $40000 again. If the Federal Reserve starts to increase M2 again, Bitcoin may see another liquidity driven rally. However, if M2 grows too fast, inflation may rise, forcing the Federal Reserve to tighten monetary policy, which is unfavorable for Bitcoin. The ideal scenario for Bitcoin is moderate M2 growth without excessive inflation, ensuring liquidity and stable economic conditions