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$10 trillion potential liquidity could ignite the market, with BTC expected to exceed $1 million by 2028.
A wave of liquidity is about to arrive, and Bitcoin is expected to break new highs.
The main issue facing the US Treasury Secretary is how to raise funds for the government. Recently, rising yields on government bonds and declining real values have made issuing debt more difficult. The Treasury needs to find buyers for an annual deficit of about $2 trillion and $3.1 trillion in debt maturing in 2025, while keeping yields under control at no more than 5%.
To address this issue, the finance minister is actively promoting the development of stablecoins. By issuing stablecoins, large banks could release up to $6.8 trillion in Treasury bond purchasing power. Additionally, if the Federal Reserve stops paying interest on reserves, it could release an additional $3.3 trillion for purchasing government bonds.
Large banks such as JPMorgan Chase have begun to lay out their stablecoin business. By converting traditional deposits into stablecoins, banks can significantly reduce compliance costs while achieving higher net interest margin returns. The stablecoin business is expected to bring enormous profits to large banks, potentially increasing their stock prices by an average of 184%.
The introduction of the "Genius Act" further consolidates the dominant position of large banks in the stablecoin market, limiting competition from fintech companies. This means that issuers like Circle will find it difficult to tap into the $6.8 trillion traditional deposit market.
Overall, there may be $10.1 trillion flowing into the Treasury bond market in the future. This massive liquidity injection will have a significant impact on risk assets, driving the market to "soar." Bitcoin is expected to rise to $1 million by 2028, and the Nasdaq 100 index could spike to 100,000 points.
Investors should seize this opportunity rather than continue waiting for Federal Reserve Chairman Powell to announce a new round of quantitative easing. Now is a great time to go long on Bitcoin and large bank stocks. Although stablecoins tout innovation, they are essentially a tool for debt monetization, providing ample liquidity for the stock market and government deficits. The market will soon welcome a wave of liquidity, and investors need to position themselves in advance to capitalize on this trend.