Senior micro strategist Mike McGlone highlighted that high-interest rates offered on the U.S treasury bills that are also known as T-bills are sucking liquidity out of the crypto markets. Four-week to one-year T-Bills have recently been auctioned off with more than 5% interest
A Treasury bill (T-Bill) is a short-term U.S. government debt obligation backed by the Treasury Department with a maturity of one year or less. Treasury bills are usually sold in denominations of $1,000. However, some can reach a maximum denomination of $5 million in non-competitive bids. These securities are widely regarded as low-risk and secure investments.
The Treasury Department sells T-bills during auctions using a competitive and non-competitive bidding process. Non-competitive bids, also known as non-competitive tenders, have a price based on the average of all the competitive bids received. McGlone highlighted that this is a major cause of the contemporary bearish trend of the market he further pointed out that a decline in the market cap of stablecoins is another reason for the liquidity drain.
He also pointed to stablecoins as melting assets at the moment. He further underlined that Stablecoins were great when had zero interest rates and negative interest rates in much of the rest of the world. But now the US government is giving you 5%. McGlone notes that crypto markets have not faced macro conditions like this before and he believes investors will turn to the high-interest T-bills and look to reinvest in crypto after the markets dip lower and their T-bill interest pays off.
The market and economic trends in the global order are impacting investments in cryptocurrencies and other digital assets. It is highlighted that the high-interest rates by the Federal Reserve of the U.S. The global economic slowdown has led to such a situation that disrupted the US market to a significant extent. In this market disruption, cryptocurrencies in the U.S. is facing another attack. It is vital to note that crypto assets are strictly regulated in the U.S. Thus, this new analysis by Mike McGlone highlights the current situation of the crypto market in the U.S.
