Bitcoin Soars 25% as US Treasury Doubling Buyback Operations

The US Treasury's decision to double its buyback operations for long-dated government bonds has sent shockwaves through the markets, and Bitcoin is leading the charge. On August 19, the Treasury quietly increased the maximum size of its liquidity support buyback operations from $2 billion to at least $4 billion per operation.

The change takes effect on September 9 and runs through November 4. The buyback program repurchases older, less-liquid long-dated bonds while issuing shorter-term bills to fund those purchases.

Bitcoin responded rapidly to the news, surging nearly 25% from an intraday low of $64,100 to above $70,000 and reaching an 11-week high. The weekly advance was driven by a combination of falling bond yields, a massive short squeeze in crypto derivatives, and a broad rotation into risk assets.

The Treasury's move compressed long-term yields, making non-yielding assets like Bitcoin and gold relatively more attractive. Markets interpreted the decision as an acknowledgment that the long end of the bond market was approaching dysfunction.