Treasury Buyback vs Fed Tightening: What Lies Ahead for Bitcoin
The US Treasury's bond buyback program is set to start on September 9, which could potentially help ease pressure in the long end of the bond market. The move comes at an awkward time for the Treasury, as long-term yields have been rising despite efforts to improve trading conditions.
The Fed's recent jobs report, which showed a strong labour market with nonfarm payrolls increasing by 162,000 in August and unemployment remaining at 4.1%, has also put pressure on Bitcoin. The stronger-than-expected numbers have increased the probability of a 25-basis-point rate increase at the September 16 meeting to around 58%.
The market is now caught between two policies moving in different directions: the Treasury's buyback program and the Fed's tightening stance. While the Treasury aims to improve liquidity in the bond market, the Fed is focused on keeping inflation under control through monetary policy.