Treasury Buybacks Spark Bitcoin Bull Market Fears

Arthur Hayes, co-founder of BitMEX, believes that the recent surge in Bitcoin's price is directly linked to the US Treasury's decision to expand its bond buyback program. The expanded limits allow for at least $4 billion per operation, starting September 9.

Hayes argues that buying older, long-dated bonds pushes their prices up and yields down. This makes assets like Bitcoin appear more attractive to investors, leading to a potential bull market.

In comparison, Hayes points out that former Treasury Secretary Janet Yellen increased short-term bill issuance in December 2023, pulling money out of the Federal Reserve's Reverse Repo Program. This led to gains in both Bitcoin and the Nasdaq 100, and Hayes expects a similar pattern now.

Bitcoin's price has risen from around $64,000 to above $80,000 since the announcement, with some $517 million flowing into US spot Bitcoin ETFs on August 19. The Treasury itself describes the buyback program as a tool for managing liquidity and its own cash position, but Hayes believes it could be a form of monetary stimulus.