Viewpoint: After raising the debt ceiling, US treasuries will absorb USD liquidity, which may affect assets such as Bitcoin.

According to a report by Coindesk on May 29th, Noelle Acheson, former research director at Coindesk and Genesis Trading, analyzed that after successfully raising the debt ceiling, the Treasury Department will seek to rebuild its cash balance through issuing government bonds. This may drain liquidity from the system and provide upward momentum to bond yields, as increasing the issuance often depresses prices and raises yields. However, it is widely known that the trend of Bitcoin (BTC) is opposite to that of bond yields. Although raising the debt ceiling may eliminate major economic uncertainty, assets such as Bitcoin that have no connection to the real economy and heavily rely on fiat liquidity may be affected. In addition, issuing more US government bonds will increase public spending, further delaying the possibility of interest rate cuts.