Bitcoin has surged roughly $10,000 over the past week, breaking above $77,000 for the first time since May after the U.S. Treasury doubled its long-dated bond buybacks. The rally briefly touched $79,500 yesterday, wiping out billions in short bets along the way.
Treasury buybacks let the government repurchase older, less liquid bonds before maturity, effectively easing borrowing costs and injecting cash into the market. The new ceiling takes effect Sept. 9 and covers 10-to-30-year Treasury bonds through the current refunding quarter, which ends Nov. 4.
The announcement pulled the 10-year Treasury yield down roughly six basis points to about 4.647%, while the 30-year yield slid nine basis points to 5.196%, a retreat from the 5.33% level it hit earlier this month, its highest since 2007. Markets read the buyback expansion as a liquidity signal, and traders rotated into bitcoin as a hedge against renewed monetary easing.
Bernstein strategist Gautam Chhugani tied the move directly to the Treasury decision, adding:
“The strong trigger in bitcoin was driven by Treasury’s move to buyback bonds at the longer end of the yield curve.”
