Bitcoin surged past $69,000 on Wednesday after the U.S. Treasury announced it would more than double the size of its long-dated debt repurchase operations, easing pressure on a bond market where yields had climbed to levels not seen since 2007.
Treasury targets the long end
The Treasury Department said it will raise the maximum buyback size for 10- to 30-year securities from $2 billion to at least $4 billion per operation, effective September 9 through November 4.
The 30-year yield fell from Tuesday’s 5.34% peak to about 5.19%, while the 10-year dropped 6 basis points to 4.647%.
Bitcoin rallied from an intraday low near $64,100 to over $69,000 before settling around $68,000.
Shorts wiped out
The move punished bearish traders heavily.
CoinGlass data showed more than $1.2 billion in crypto positions were liquidated within a single hour, with short sellers accounting for roughly $1.29 billion in losses.
Over 110,000 traders were liquidated in 24 hours for a combined $1.45 billion.
Macro implications for bitcoin
Rising long-term yields had been weighing on bitcoin by making risk-free government debt more competitive for investor capital.
The Treasury’s intervention eased that pressure, though the buybacks do not reduce the government’s overall debt burden.
Andre Dragosch, Bitwise Europe’s head of research, said:
“Bitcoin is the canary in the macro coal mine that anticipates changes in financial conditions both to the downside AND upside. Rising yields are already forcing the hand of the Treasury to intervene and BTC is sniffing it out.”
Matt Cole, chairman of bitcoin treasury company Strive, argued that persistent deficits and rising debt leave policymakers with no painless path, and that the resulting dollar devaluation could give bitcoin a stronger macro tailwind than any of its previous cycles over the next five to seven years.
