Bitcoin surges nearly 25% after US Treasury doubles buyback operations

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.

Over the quarter, the expanded buyback program could add approximately $14 billion in incremental volume.

Why Bitcoin moved

The buyback announcement compressed long-term yields. When 30-year bonds get bought, their prices rise and yields fall. Lower long-term yields reduce the opportunity cost of holding non-yielding assets like Bitcoin and gold, making them relatively more attractive.

Markets interpreted the Treasury’s move as an acknowledgment that the long end of the bond market was approaching dysfunction. Third, and perhaps most violently, the move sparked a significant short squeeze in crypto derivatives. Estimates of the liquidation cascade range from $1.1 billion to $3.5 billion, as leveraged bearish positions were forcibly closed.

Equities rallied in tandem, confirming this wasn’t a crypto-specific phenomenon but a broad reassessment of risk appetite across asset classes.

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