Treasury Buyback May Not Be Enough to Save BTC from Fed Tightening
The Treasury is implementing a buyback operation to ease pressure on the bond market, but it may not be enough to help Bitcoin break above $80,000.
The operation involves buying older securities from dealers and investors to improve liquidity and trading conditions in the longer-dated part of the curve. This move is primarily aimed at supporting market functioning and improving the ability of the market to absorb the large volume of debt issuance still ahead.
However, this may not be enough to offset the impact of a stronger-than-expected labour market report, which has given the Federal Reserve less reason to rush towards easier policy. Higher yields increase the return available from dollar assets and raise the opportunity cost of holding an asset that does not generate income, making it an uncomfortable setup for Bitcoin.
Despite this, institutional demand remains positive, with US spot Bitcoin ETFs attracting $730.8 million on September 3, the largest single-day inflow of the year. However, the current pullback is different from a simple risk-off move as capital is still entering the spot market even as price struggles.