Everyone wants a dramatic explanation when markets fall. It’s easy to blame quantum FUD or say the Fed is suddenly ultra-hawkish again. But the real reason your crypto bags are bleeding right now is much simpler liquidity.
Over the past month, the U.S. Treasury has drained nearly $150 billion from the financial system to rebuild its Treasury General Account (TGA). When the TGA balance rises, cash is effectively pulled out of the economy and parked at the Fed. That reduces available liquidity in markets. And when liquidity tightens, risk assets suffer.
Add that to an already slowing economy and you get the perfect environment for underperformance in risk-on assets. Crypto feels it first because it’s one of the most liquidity-sensitive markets. But it’s not alone. Even the Mag7 stocks are down year-to-date in 2026, with some names off 12–15%. That’s not a crypto-specific issue. That’s a liquidity issue.
Now the key question: does the dump continue?
The TGA balance is already near $922 billion — a level that has acted as a ceiling since the post-pandemic period. Historically, once that balance peaks, the next phase involves spending and drawdowns, which re-inject liquidity back into the system.
On top of that, roughly $150 billion in tax refunds is expected to hit the market by March. That’s fresh cash entering the economy — potential fuel for a relief rally.
Markets don’t move on narratives. They move on liquidity. And when liquidity returns, so does risk appetite.