Latest / The Cryptocurrency Economy with Fexingo: Bitcoin, Ethereum, and Digital Money Markets / The Real Reason Bitcoin Is Stuck at 75000
Transcript
- Lucas: Bitcoin's been sitting between 75,000 and 76,000 for most of May, and as of this evening—May 26—it's at 75,816, basically flat over the past five days. Ethereum is stuck just above 2,060. And if you look at the broader crypto market, it's the same story: Solana down a fraction, Cardano down a little more. Nothing's really breaking out. Luna: And this is happening while the Fed is holding rates at 3.64 percent, stablecoin market cap is near 230 billion dollars, and on-chain activity feels maybe lukewarm but not terrible. So what's the bottleneck? Lucas: That's exactly the question. And I think the answer is something most retail traders don't track day-to-day: the Treasury General Account—the TGA. It's the government's checking account at the Fed. And right now, it's draining liquidity out of the banking system in a way that directly suppresses bid-side pressure in crypto. Luna: OK, so before we go deep, quick honest thing—a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making these episodes possible. If walking through the economy with us has made something click, that coffee link is there. No pressure. Appreciate the ones already doing it. Lucas: Yeah, genuinely. It keeps this ad-free and lets us dig into stuff like TGA mechanics without worrying about sponsor copy. So—back to the plumbing. Lucas: The Treasury General Account balance has been trending higher this spring. When the Treasury issues debt and keeps the proceeds in its account at the Fed, those dollars effectively leave the banking system. They're not available for banks to lend, not available for market-making, not available for anything. And that reduces the pool of 'risk capital' that could flow into assets like Bitcoin. Luna: So it's not just about rate hikes or Fed rhetoric. It's about actual dollar availability in the system. Lucas: Exactly. And right now, the Fed is also paying 3.65 percent on reserve balances. That's the interest on reserves, or IORB. That rate is an incentive for banks to park cash at the Fed rather than deploy it into lending or even into money-market funds that might then trickle into crypto. So you've got two simultaneous drains: the TGA hoovering up dollars and the IORB rate making it attractive to sit still. Luna: And crypto doesn't offer a yield that competes with that right now. Ethereum staking is around 3.2 percent, maybe less. DeFi lending rates are all over the place but generally below 4 percent for stablecoins. So why would a bank or an institution move into crypto? Lucas: They wouldn't. And the data confirms it. Look at stablecoin inflows to exchanges—they've been net negative or flat for most of May. That's the on-chain signal that new dollar liquidity isn't entering the trading ecosystem. Without new stablecoin issuance or fresh fiat on-ramps, Bitcoin just doesn't have the fuel to break out. Luna: But we also saw the stablecoin market cap grow from around 200 billion to 230 billion over the past few months. That's a lot of new dollars. Where are they if not on exchanges? Lucas: Most of that growth is in yield-bearing stablecoins or those sitting in DeFi protocols earning yield, not sitting on exchanges ready to buy Bitcoin. They're being used for payments, remittances, or just parked in lending pools. So the supply of 'dry powder' that can actually buy crypto assets is much smaller than the headline market cap suggests. Luna: So it's a liquidity mirage. Big stablecoin market cap, but the portion that's ready to deploy into risk assets is actually shrinking. Lucas: Right. And that ties back to the macro picture. The Fed hasn't changed its posture—rates flat, balance sheet still slowly shrinking via quantitative tightening. The Treasury is issuing more debt to fund the deficit, and the TGA is swelling. Until one of those gears shifts, the ceiling on crypto feels real. Luna: What would break the stalemate? A Fed rate cut? A debt-ceiling deal that forces the Treasury to draw down the TGA? Lucas: Both of those would help. If the Treasury has to spend down its cash balance because the debt ceiling binds, that injects liquidity back into the system. That's actually happened before—in 2023, when the debt ceiling was suspended, the TGA dropped by hundreds of billions, and that coincided with a big crypto rally. A Fed rate cut would also reduce the IORB rate, making it less attractive to sit on cash. But neither of those is imminent. The debt ceiling fight is ongoing, and the Fed's been clear they're in no hurry to cut. Luna: So we're looking at a market that's range-bound because of plumbing, not because of any fundamental flaw in crypto itself. Lucas: Exactly. And that's actually a useful lens. When people say 'Bitcoin is dead' or 'crypto is broken,' they're ignoring the structural liquidity environment. The technology and adoption keep growing—layer-2s, institutional custody, regulatory clarity in some jurisdictions. But the macro headwind is real, and it's dollar-denominated. Luna: How long could this last? Are we looking at months of sideways action? Lucas: That depends on fiscal and monetary policy. If the Fed holds steady and the TGA stays elevated, you could easily see Bitcoin in the 70,000 to 80,000 range through the summer. A break above 80,000 would probably require a catalyst—like a surprise Fed pivot, a major regulatory approval, or a sharp drop in the TGA. None of those are certain. Luna: And on the downside, what's the floor? Could liquidity tightening push crypto lower? Lucas: Potentially, yes. If the Fed signals a rate hike—which seems unlikely but isn't impossible—or if the Treasury issues even more debt and the TGA spikes further, you could see Bitcoin test the 70,000 support. But there are buyers at those levels. The on-chain data shows accumulation addresses have been steadily adding since February, especially in the 70,000 to 75,000 range. So the downside might be limited by real demand. Luna: So it's a tug of war between macro headwinds and underlying adoption. That sounds like the whole story of crypto in 2026. Lucas: It really is. And that's why tracking things like the TGA and IORB is more useful than watching price charts alone. The next big move will come when the liquidity picture changes—not because of a tweet or a meme.