The US Treasury quietly doubled the size of its buyback operations for long-dated government bonds on August 19. Bitcoin responded by doing the opposite of quiet, ripping from an intraday low near $64,100 to above $70,000 and notching an 11-week high.
The weekly advance approached 25%, driven by a combination of falling bond yields, a massive short squeeze in crypto derivatives, and a broad rotation into risk assets.
What the Treasury actually did
Treasury Secretary Scott Bessent announced that the maximum size of liquidity support buyback operations for 10- to 30-year nominal Treasury securities would increase from $2 billion to at least $4 billion per operation. The change takes effect September 9 and runs through November 4.
The Treasury repurchases older, less-liquid long-dated bonds while issuing shorter-term bills to fund those purchases. The 30-year Treasury yield had climbed to levels not seen since 2007, creating increasingly uncomfortable conditions in a market already straining under the weight of heavy debt issuance. Total US public debt now exceeds $40 trillion.
