Treasury's Bond Buyback Binge Sends Bitcoin Soaring

The US Treasury's decision to double its long-term bond buyback operations has sent shockwaves through markets, causing Bitcoin (BTC) and other cryptocurrencies to surge.

The Treasury will increase liquidity support buyback operations for longer-dated nominal coupon securities from a maximum of $2 billion per operation to at least $4 billion per operation. This change takes effect on September 9 and runs through November 4, 2026.

The news has caused Bitcoin (BTC) to jump 6%, while Ethereum (ETH) surged 8% and XRP gained 4%. The US Treasury's move is seen as a sign that the Federal Reserve is constrained in its ability to keep tightening, which has historically pushed capital into hard assets like gold and crypto.

Peter Schiff argued on Twitter that the Treasury's decision will send inflation soaring because the money used to fund the buybacks is ultimately created by the Fed. He also stated that funding the buybacks through short-term debt issuance makes it harder for the Fed to raise rates, which in turn puts pressure on the Fed to cut interest rates and implement quantitative easing.