Bitcoin rally accelerates as U.S. Treasury buyback tweak eases yield pressure

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Bitcoin rally on Treasury move

Highlights

The U.S. Treasury doubled buyback operations in long-dated bonds to $4 billion per operation, pushing 30-year yields down from 5.34% to 5.19%.
Bitcoin surged about 25% since Wednesday, breaking $78,000 as roughly $4 billion in bearish crypto positions were liquidated on Thursday and Friday.
Bitcoin's rally was further supported by approximately $650 million in net inflows into U.S. spot bitcoin ETFs this week, with the $69,000 200-day moving average as a technical threshold.

Treasury move sparks crypto squeeze

As reported by CoinDesk, the U.S. Treasury says it will double the size of its buyback operations in the longest-dated government bonds to $4 billion from $2 billion per operation, a step that helps push the 30-year Treasury yield down from 5.34%, a 19-year high, to around 5.19%. Bitcoin rises about 25% since Wednesday and moves past $78,000 by Asian morning hours on Saturday, with roughly $4 billion in bearish crypto positions liquidated on Thursday and Friday as prices climb.

A Treasury buyback involves the government repurchasing previously issued bonds from investors, mainly to improve trading in older securities and manage the composition of its debt. Analysts stress that the program is not quantitative easing, because it does not involve the Federal Reserve creating reserves to buy assets and broadly loosen financial conditions.

Jeff Ko, chief analyst at CoinEx, says the buyback is primarily a liquidity and debt-management tool rather than a major policy shift. Shawn Young, chief analyst at MEXC Research, says the scale of bitcoin's jump suggests the bond move acts more as a trigger for an overcrowded market than as the sole reason for the rally.

Yield competition and next market test

Falling Treasury yields can support bitcoin because the cryptocurrency offers no income simply for being held, while U.S. government debt is widely treated as a low-risk alternative. When investors can earn close to 5% from Treasuries, volatile assets such as bitcoin need a stronger case to attract capital, making lower yields a more favorable backdrop for crypto demand.

Hong Yea, co-founder and CEO of Grvt, says high risk-free yields raise the hurdle for capital to move into crypto, while lower yields make investors more willing to seek growth and risk again. Himanshu Sahay, co-founder and chief technology officer of Arch Lending, says longer-term rates are increasingly moving independently from near-term Federal Reserve expectations, and warns that a broader rise in yields could still weaken appetite for non-yielding assets.

The rally is also drawing support from roughly $650 million of net inflows this week into U.S. spot bitcoin exchange-traded funds. Ko says the next technical test is whether bitcoin can hold above its 200-day moving average near $69,000, a level traders often use to judge whether a longer-term trend is strengthening or weakening.

In our earlier article on the U.S. Treasury’s move to at least double buybacks of longer-dated Treasurys, we noted that the decision was lifting market-based inflation expectations and stirring debate about broader policy effects. We also explained how shifting supply dynamics and mixed yield signals could complicate investors’ interpretation of long-term rates and what they imply for Fed policy and inflation.

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