- Boosting liquidity may support Bitcoin's recovery

Amidst the mixed feelings of institutional investors and the intense fear among traders, the "Copysale Letter X" published on Tuesday indicates signs of optimism regarding Bitcoin.

The report clarified that the general treasury account decreased to 78 billion dollars during the past week, marking the largest liquidity injection since June, as illustrated in the chart below. The analyst noted that the general treasury account is the main cash account of the U.S. government with the Federal Reserve, and that when it decreases, funds flow directly into the financial system, enhancing liquidity.

Furthermore, the Federal Reserve is injecting $40 billion into the economy by purchasing bonds. It will reinvest $14.4 billion from mortgage-backed securities principal payments to buy Treasury bills during the same period, thereby enhancing overall liquidity.

This wave of net liquidity injection into financial markets will make borrowing cheaper and encourage a shift towards risk-taking, especially in assets like stocks and cryptocurrencies, providing short-term support.