Treasury Buybacks Trigger Bitcoin's Breakout Above $80,000
Bitcoin's price surged to new heights this week, breaking through resistance near $70,000 and catapulting the cryptocurrency above $80,000 for the first time since May. The rally was sparked by a significant announcement from the US Department of the Treasury, which announced that it would double the size of its liquidity-support buyback operations for longer-dated coupon securities.
The move is expected to ease borrowing costs and inject cash into the market, with the new ceiling taking effect on September 9. Markets interpreted this as a liquidity signal, and traders rotated into Bitcoin as a hedge against renewed monetary easing.
Short sellers who had built up positions during the six-week range were caught offside, and automated liquidation engines began force-closing those bets as the price climbed. This resulted in a record short squeeze, with traders losing $3 billion in a single 24-hour window.
The Treasury's decision was seen as a key trigger for the Bitcoin rally, according to Gautam Chhugani, a strategist at Bernstein: 'The strong trigger in bitcoin was driven by Treasury’s move to buyback bonds at the longer end of the yield curve.'