Bitcoin Jumps $10,000 in a Week as Shorts Lose $3 Billion

The Treasury Trigger

Bitcoin had spent six weeks pinned between $60,000 and $65,000 before this week’s breakout. The move began after the US Department of the Treasury said it would at least double the size of its liquidity-support buyback operations for longer-dated coupon securities, raising the maximum from $2 billion to $4 billion per operation.

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.”