Treasury Secretary Admits Bond Market Uncontrollable, Raising Concerns for Bitcoin

US Treasury Secretary Scott Bessent recently acknowledged that the government cannot control the bond market, a statement that has sparked debate about the potential impact on Bitcoin.

Bessent defended the larger Treasury buybacks, citing the need for liquidity support during thin trading conditions, but admitted that 'I can't set the equilibrium price.'

The remarks come as Bitcoin has seen a significant rally in August, with some analysts attributing the surge to renewed demand for assets seen as hedges against dollar weakness.

The Treasury's decision to increase buyback sizes to at least $4 billion per operation has been seen as a way to address trading conditions, but some experts warn that it could also strengthen concerns about inflation and the purchasing power of dollar-denominated assets.

Bessent linked long-term yields to oil prices and the Iran conflict during the interview, suggesting that improved energy supply could help rates decline.

Bitcoin's fixed supply gives it a place in the narrative of assets expected to benefit from a weaker currency, and its price has been volatile and sensitive to speculative positioning.

The 'debasement trade' has seen investors buying assets they expect to benefit from a weaker dollar, and Bitcoin's price has been influenced by short covering and favorable crypto policy developments.

However, a bond-market shock could cut both ways for crypto, with declining confidence in government debt potentially encouraging investors to seek assets outside sovereign balance sheets, or rising yields and urgent cash needs triggering selling across risk assets, including cryptocurrencies.