Treasury Buyback Meets Fed Tightening: A Mixed Signal for Bitcoin

The Treasury Department is introducing new liquidity-support operations to ease pressure on the bond market. Starting September 9, the maximum size of its operations for 10-to-20-year and 20-to-30-year securities will be at least $4 billion per operation.

This move comes as the jobs report has pushed the Fed back into the driver's seat. The August nonfarm payrolls increased by 162,000, while unemployment remained at 4.1%, stronger than expected.

The reaction was immediate: Fed funds futures moved to price a 58% probability of a 25-basis-point rate increase at the September 16 meeting, and Treasury yields rose sharply higher.

This combination of strong economic data and potential interest rate hikes is an uncomfortable setup for Bitcoin. The cryptocurrency may benefit from the Treasury's buyback operation, but it could also be negatively affected by the Fed's tightening policy.