Bitcoin Surges as US Treasury's Bond Buyback Expansion Fuels Risk-On Rally

Bitcoin's price has surged to above $70,000, and according to Matthew Sigel, head of digital asset research at VanEck, this rally is a sign that Bitcoin is finally behaving like the hedge it was meant to be.

Sigel attributes the move to fears over US fiscal policy, specifically the recent decision by the US Treasury to double its long-dated bond buyback ceiling from $2 billion to at least $4 billion per operation. This action compressed yields and contributed to a broader risk-on rally tied to the Treasury's bond buyback expansion.

The $3 billion in forced short liquidations that resulted from this move amplified the price increase, with Bitcoin climbing to $72,757. Sigel downplays the impact of the CLARITY Act, a crypto market structure bill working its way through Congress, as the driver of the rally. He notes that prediction markets price a slim chance for the bill to become law this year, which he says explains why the rally isn't about the Senate odds.

Sigel's argument is that Bitcoin is one of the best hedges available on the current dynamic, citing its fixed supply and ability to protect against dollar debasement. However, this framing carries a mixed record, as Bitcoin's correlation with US equities actually spiked during the 2020 COVID crash and the 2022 rate-hiking cycle.