Bitcoin price could fall toward $70,000 as U.S. Treasury settlements pull cash from markets, an analyst warns.
A break below key support could send Bitcoin price toward $70,000 if tighter liquidity keeps pressuring risk assets, according to one macro analyst.
According to Michael Kramer, the founder of the macro research firm known as Mott Capital Management, in a market note posted on May 27, the price of Bitcoin had already dropped by about 8% since the U.S. Treasury switched from paying back to borrowing on May 12.
Over the same period, Kramer pointed out that the stock index he tracks had risen about 1.8%, though most of those gains came on May 13 and May 14, with the market otherwise stalling near the 7,515 area.
As of press time, Bitcoin tradesis trading around $73,157, down about 3.7% over the past 24 hours, per CoinGecko data.
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As Kramer argues, Bitcoin price may be warning about liquidity before other markets fully react. Right now, the largest crypto by market cap is “sitting on support around $75,000, and a break below that level could set up a move towards $70,000,” he wrote.
He pointed out that Bitcoin is worth watching because, in his experience, it “tends to be a better liquidity indicator than most other instruments.” Kramer added:
“If the Treasury settlements are a drain on liquidity, then Bitcoin could be heading much lower.”
The Treasury Drain
According to Kramer, the issue is that the debt settlement schedules by the U.S. Treasury will begin draining money from the financial markets rather than adding to them.
The first drain kicks off today with $15 billion in settlements of Treasury bills purchased recently. After that, it becomes more aggressive, with settlements of $47 billion of Treasury notes and bonds on May 29, and another $68 billion of such settlements on June 1, along with a further $16 billion in settlements of Treasury bills on June 2.
Kramer also expects another $5 billion to $15 billion Treasury bill settlement on June 4.
When investors pay for newly issued government debt, cash moves into Treasuries and away from other parts of the market. Per the Mott Capital Management founder, if that squeeze hits risk assets, Bitcoin may show the pressure faster than other markets.
