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How a Treasury buyback tweak helped bitcoin surge 25% to nearly $80,000 in days
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- DeepHorus
A modest tweak to the U.S. Treasury's bond buyback program has triggered a dramatic surge in Bitcoin's price, pushing it up 25% to nearly $78,000 within days. The rally was ignited after the Treasury announced it would double the size of its buyback operations for the longest-dated government bonds from $2 billion to $4 billion per operation. This move helped pull the 30-year Treasury yield down from a 19-year high of 5.34% to around 5.19%. The falling yields provided the catalyst for a record short squeeze in the crypto market, with approximately $4 billion in bearish positions liquidated on Thursday and Friday.
Treasury buybacks are operations where the government purchases its own previously issued bonds from investors. Their primary purpose is to improve market liquidity and manage the composition of the national debt, not to stimulate the economy. Analysts were quick to clarify that this is not quantitative easing, where the Federal Reserve creates new money to buy assets. Instead, CoinEx chief analyst Jeff Ko described it as "a signal, a soft policy put on the long end" of the yield curve given its relatively small scale.
The impact on Bitcoin stems from the relationship between government bond yields and risk assets. U.S. Treasuries are considered a risk-free investment, offering a guaranteed return. When their yields are high, they compete more directly with volatile assets like Bitcoin, which pay no interest. As Grvt CEO Hong Yea explained, when risk-free yields are high, "capital becomes more willing to seek growth and risk again, which has historically been a much better environment for Bitcoin."
The price rally was further supported by significant capital inflows, with about $650 million flowing into spot Bitcoin exchange-traded funds weekly. Market participants are now closely watching whether Bitcoin can sustain its position above its crucial 200-day moving average, which sits near $69,000. This technical level is often used by traders to gauge the long-term trend of an asset.
Looking ahead, the event highlights the growing sensitivity of cryptocurrency markets to traditional macroeconomic indicators and U.S. fiscal policy. While the Treasury's move was not aimed at crypto markets, its indirect effect underscores how interconnected global financial systems have become. Traders and investors will likely monitor future Treasury operations and long-term yield movements for clues about Bitcoin's next directional move.
