Treasury's $6 Billion Bond Intervention Tests Bitcoin's Next Move

The US Treasury has set a $6 billion ceiling for its September 10 buyback of older long-dated bonds, which could provide relief to dealers struggling with inventory. This operation targets nominal Treasury securities with 10 to 20 years remaining and is scheduled from 1:40 p.m. to 2 p.m. Eastern on September 10, with settlement the next day.

The ceiling is triple the previous $2 billion limit, exceeding the minimum expansion announced by the Treasury in August. However, it's essential to note that accepted purchases and funding conditions will matter more than capacity alone in determining the effectiveness of this operation.

Bitcoin's liquidity thesis still depends on sustained improvements in bond trading and broader funding conditions, rather than just the capacity for purchase. The evidence needed to strengthen Bitcoin's hypothesis includes a large purchase showing bonds changing hands, as well as narrower gaps between buying and selling prices.