Treasury Buyback Boosts Bitcoin by 20%

Bitcoin experienced its largest weekly gain since March 2024 last week, surging over 20% in value. This rally was fueled by a shift in liquidity conditions in the US Treasury market, which prompted investors to rotate into risk assets like Bitcoin and gold.

The catalyst for this shift was the US Treasury's announcement that it would double the size of its long-term Treasury buybacks. This move led to a decline in long-term Treasury yields and a weaker US dollar, making alternative assets like Bitcoin more attractive.

QCP Capital noted that the early phase of the rally was driven by large-scale short covering, as traders who had bet against Bitcoin were forced to close positions. Later, buying momentum shifted to spot demand, with U.S. spot Bitcoin ETFs recording approximately $2.6 billion in net inflows, the largest weekly inflow since October last year.

QCP Capital clarified that the Treasury buybacks are a debt-management measure, not quantitative easing (QE), which is a more broadly impactful monetary policy tool used by central banks to inject liquidity into the economy.