The U.S. Treasury’s plan to refill its General Account (TGA) with $500–600 billion over the next two months is set to test one of the most fragile liquidity environments in a decade.
What Happened: According to Marcus Wu, Markets Research at Delphi Digital, the implications extend far beyond traditional finance, with stablecoins now positioned as both the first casualty and the unlikely stabilizer of this liquidity drain.
“In 2023, a $550B TGA rebuild was cushioned by over $2T in the Fed’s Reverse Repo Facility, healthy bank reserves and strong foreign Treasury demand,” Wu said. “Those buffers are now gone.”
Unlike prior cycles, every new dollar raised this fall will come directly from active market liquidity, magnifying the transmission of stress into risk assets.
Wu argues that crypto markets, particularly stablecoins, will be the first to show signs of strain.
“In 2021, stablecoin supply expanded even as the TGA rose, …