Bitcoin Surges as US Treasury Expands Bond Buyback Programme

The US Treasury's announcement to expand its long-term bond buyback programme has sent shockwaves through financial markets, causing Bitcoin, Ethereum, and XRP to surge more than six per cent.

The expanded operations will see liquidity support buybacks of longer-dated nominal coupon securities increase from a maximum of $2 billion per operation to at least $4 billion, effective from September 9 and continuing through November 4.

Economist Peter Schiff warned that the buybacks amount to the Treasury absorbing bonds that private investors no longer want, funded indirectly through the Federal Reserve. He argued that this would raise the government's interest bill and widen the deficit, making it harder for the Fed to keep rates elevated and increasing pressure for future rate cuts and quantitative easing.

Analysts at TD Securities suggested that Treasury liquidity support, combined with a likely Fed policy stance, is pushing real interest rates lower. This has created a backdrop that typically benefits both gold and cryptocurrencies.