Bessent's $4 Billion Bond Buyback Plan Triggers Unexpected Rally in Bitcoin and Gold

U.S. Treasury Secretary Scott Bessent's move to calm the Treasury market by increasing bond buybacks has had an unexpected result: a surge in Bitcoin and gold prices.

Last week, Bessent announced that the Treasury would raise its maximum per-operation bond buyback amount from $2 billion to at least $4 billion. The goal was to reduce longer-duration yields, which were hovering at their highest levels since 2007.

However, instead of reducing yields, the market reacted with a rally in hard assets. Bitcoin's price surged to nearly $80,000, while gold rallied too. Analysts suggest that this reaction is due to investors expecting more aggressive liquidity-easing operations from officials to manage rising long-duration borrowing costs.

Fabian Dori, chief investment officer at Sygnum, stated in an email: 'Bitcoin's move reflects an alignment of macro and policy catalysts... The Treasury's decision to double its buybacks of long-dated government debt is aimed at calming the bond market and providing liquidity at the long end of the curve.'

The actual target of the move, bond yields, has not budged in a meaningful way. The 30-year yield remains around 5.25%, still near its highest level since 2007.