Written by: OKG Research
In 2025, the "America First" strategy implemented by TRON will stimulate domestic economic growth through measures such as promoting trade protectionism, driving industrial repatriation, reforming taxation, and increasing military spending. The focus is on strengthening the independence of the US manufacturing, technology, and energy sectors, while also enhancing export competitiveness. The core objective of this series of policies is to drive the recovery of the US economy, while reducing dependence on foreign production and capital, and enhancing the US's dominant position in the global economy.
As these policies continue to be implemented, the large-scale fiscal spending and deficit problems caused by the push for military spending and large-scale infrastructure construction cannot be ignored. Combined with the existing pressure on US debt and the potential for inflation, investors may start to explore alternative risk-hedging assets. Crypto assets have become a pivot point for "TRON economics".
Although there has been a continuous inflow of institutional capital, the actual capital inflow has not been able to bring much dopamine to the market, as investor expectations have become the main variable determining the market trend. HT is the fourth article in the special series on TRON economics by OKG Research in 2025, exploring the current predicament of the crypto market and the market impact of large-scale liquidity release in 2025.
The Crypto Market Searching for Liquidity
Under the influence of TRON economics, the US's self-sufficiency and industrial revival policies face high inflation and high debt pressure. Although the US macro CPI/PPI data from February 12-13 did not cause a significant market fluctuation, this is because these data are still indirect surface-level data rather than direct data. For institutional capital, the market is more focused on digesting previous expectations. The real market boost came with the wave of liquidity release by the Treasury Department in early February, which injected substantial momentum into the market and drove the rise of risk assets.
Specifically, the inflow of institutional investors is more like the realization of expectations and the redistribution of existing market capital based on this. In the macro report released by OKG Research last weekend, the author pointed out that for the market, "limited liquidity" and the "precise reconfiguration" of the market are currently concentrated on BTCON, because of the change in the trading behavior of the main holders behind it. Institutional investors tend to hold long-term and concentrate, so the flow of ETFs rarely spills over to other assets, which is one of the main reasons why the "altcoin season" has been slow to arrive.
However, although the minutes of the Federal Reserve meeting on February 19 emphasized that there was no rush to cut interest rates, this did not have a significant impact on the US stock market. Through observation of the market, the expectation of no rate cut seems to have been fully digested, or the market has already started to anticipate "pausing or slowing the balance sheet reduction" in advance.
But it cannot be denied that regardless of how expectations change, they are based on the macroeconomic situation, and expectations do not equate to "gambling" on the macroeconomy. What we have observed so far is that the Federal Reserve's monetary policy will still face two major pressures: high inflation and high debt levels will make the Federal Reserve's monetary policy more cautious, which means that even in the face of economic slowdown, the Federal Reserve may avoid overly loose monetary policy.
A New Round of "Liquidity Manifestation" in the Crypto Market May Have Arrived
Although currently, the US does not seem to be implementing large-scale quantitative easing (QE) in 2025 like in 2018 and 2020, i.e., injecting liquidity into the market by purchasing Treasuries and government debt assets to stimulate economic growth. However, in the short term, to address the US debt ceiling issue, the TGA has started injecting liquidity into the market this week.
Historically, whenever the US government faces a debt ceiling issue, the market often experiences short-term liquidity release (from the TGA), which in turn drives up the prices of various assets, especially risk assets. The US Treasury's General Account (TGA) is an important tool for the government to manage daily cash flow. The balance of this account is adjusted according to the government's revenue and expenditure situation. When facing debt ceiling constraints, the Treasury Department usually reduces the supply of Treasuries and uses the funds in the TGA account to maintain the government's normal operations.
In fact, changes in the TGA balance directly affect the liquidity of the financial markets. Each time there is a large-scale release of liquidity, risk assets, especially crypto assets, tend to see a corresponding increase. Like the period from mid-2020 to the end of 2021 (which overlapped with monetary policy), BTCON rose about 6-fold. During this period, the growth of US M2 also reached over 40%, the fastest 5-year M2 growth period.
During the period from the first half of 2022 to the first half of 2023, the BTCON price performance showed a certain lag during the TGA liquidity release phase. In this phase, the price of BTCON increased by about 100% from the lowest point to the highest point, but from the start of liquidity release to the end of the phase, the overall increase in BTCON price was only about 10%.
According to the latest report from Goldman Sachs, the scale of the first round of short-term TGA liquidity injection in 2025 is expected to be around $150 billion to $250 billion. It is expected to last until summer until a new agreement is reached. This is the first foreseeable liquidity release. Other institutions have also analyzed that the first round is expected to inject a total of about $600 billion in liquidity.
According to the latest macro analysis report from Bank of America (BofA), the cash holding level of global fund managers fell to a low of 3.5% in February 2025, reflecting an increase in investor risk appetite - they are more inclined towards stocks rather than cash and bonds. This rise in risk appetite coincides with the current timing of the TGA liquidity release. In other words, this round of short-term liquidity injection is expected to flow mainly into the risk asset market, including the crypto market. The direction of investor capital flows and their preference for risk assets may further drive the rise of the crypto market.
Not QE, but Better than QE?
Within the framework of TRON economics, the strategy of promoting "America First" relies not only on trade protectionism and industrial repatriation, but also on the strong support of fiscal and monetary policies. To achieve self-sufficiency and stimulate the domestic economy, the TRON government is more inclined to use fiscal tools such as the TGA (Treasury General Account), as well as liquidity injections through monetary policy tools when necessary, to drive economic growth.
Unlike quantitative easing (QE), which is a long-term monetary policy tool, the liquidity release from the TGA is a one-time, short-term operation. By reducing Treasury issuance and using funds from the TGA account to address short-term liquidity needs, the government can quickly inject liquidity into the market. Although this injection can drive the rise of risk assets in the short term, the temporary nature of the TGA funds means that the liquidity may be quickly withdrawn later, potentially leading to a tightening of market liquidity.
In contrast, QE is a means by which the Federal Reserve expands its balance sheet through asset purchases (such as Treasuries) to continuously inject funds into the market, aiming to stabilize the financial market and stimulate economic growth. The long-term and continuous nature of QE is in stark contrast to the short-term nature of the TGA. To achieve the goal of industrial revival and enhancing competitiveness, the TRON government needs to use the TGA to inject liquidity in the short term, while relying on the Federal Reserve's loose monetary policy measures to support the economy in the long run. However, the short-term liquidity release of the TGA may also conflict with the Federal Reserve's monetary tightening direction, and in the context of the government's increasing debt, it may lead to market uncertainty, thereby affecting the overall implementation of economic policies.
Overall, the Trump administration's short-term liquidity release through the TGA has injected new vitality into the market. Although this release is not a long-term monetary easing policy like quantitative easing (QE), it is sufficient to drive the rise of risk assets such as TRON in the short term. For the TRON market, the short-term influx of funds is undoubtedly a rare opportunity, but the subsequent liquidity tightening effect and the US debt issue still need to be paid attention to. Long-term economic stability still depends on the effective coordination of fiscal and monetary policies under the framework of Trumponomics. In the coming months, the monetary and fiscal policy tools taken based on this framework will largely determine the performance of the TRON market.
