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- Analysts said the Treasury’s buyback expansion does not qualify as quantitative easing, but the move helped ease long-term yields and fueled a major bitcoin short squeeze.
- A modest adjustment in the U.S. bond market became a catalyst for bitcoin’s latest surge as lower yields encouraged traders to unwind heavily bearish bets.
- The Treasury increased its purchases of long-dated government bonds to $4 billion per operation from $2 billion, helping pull the 30-year yield down from 5.34% to around 5.19%.
- Bitcoin advanced roughly 25% from Wednesday and topped $78,000 by Saturday morning in Asia, while about $4 billion in bearish crypto positions were wiped out over two days.
- Treasury buybacks involve repurchasing previously issued government bonds, primarily to improve liquidity in older securities and manage the composition of federal debt.
- The program is distinct from QE because the Federal Reserve is not creating reserves to purchase assets as part of the operation.
- CoinEx analyst Jeff Ko said the buyback is mainly a liquidity and debt-management measure, though its limited scale may also signal a more supportive stance toward longer-term Treasury markets.
- Rising Treasury yields had been creating headwinds for bitcoin and other risk assets by offering investors more attractive returns from relatively safe government debt.
- Since bitcoin does not generate income simply from being held, higher Treasury yields can make investors less willing to shift capital into a more volatile asset.
- Hong Yea, CEO of Grvt, said elevated risk-free returns increase the hurdle bitcoin must clear to attract fresh investment.
- Lower yields, by contrast, can make investors more comfortable moving money toward riskier assets, potentially improving bitcoin’s appeal.
- Long-term Treasury rates influence financing costs throughout the economy, with higher yields raising borrowing expenses and often reducing demand for assets tied to future growth.
- The strength of bitcoin’s rally suggests the Treasury move acted more as a trigger, while crowded short positions helped magnify the gains.
- MEXC Research analyst Shawn Young said the market may have overestimated the impact of the Treasury announcement, with the scale of the squeeze showing how heavily traders had positioned for further declines.
- Young viewed the bond-market move as a temporary release of pressure rather than a fundamental improvement in bitcoin’s macroeconomic outlook.
- He said the fall in yields forced short sellers to exit faster than it changed the broader investment case for bitcoin.
- Young warned that a rebound in the 10-year yield above 4.7% or a move in the 30-year yield toward 5.3% could challenge bitcoin’s breakout.
- The recent behavior of 10-year and 30-year Treasury yields has also become less closely tied to expectations for the Fed’s near-term interest-rate policy.
- Arch Lending executive Himanshu Sahay said longer-term yields are increasingly following their own trajectory instead of simply responding to the Fed outlook.
- Bitcoin’s response may indicate that traders remain cautious, with stronger demand needed to establish a sustained move beyond its recent trading range.
- Sahay said the greater concern would be if rising long-term yields began lifting inflation expectations and weakening risk appetite across markets.
- The Treasury move came alongside other positive developments for crypto, including President Donald Trump’s renewed support for U.S. leadership in digital assets and calls to advance the CLARITY Act.
- Spot bitcoin ETFs in the U.S. also recorded about $650 million in net inflows during the week, adding buying pressure to a market already experiencing short covering.
- Ko said bitcoin’s ability to remain above its 200-day moving average near $69,000 would be a key indicator of whether the rally can continue.
- Holding that level as support, combined with sustained ETF inflows, would strengthen bitcoin’s technical setup.
- Bitcoin has moved decisively above the 200-day average, but sustaining the breakout could remain difficult while investors can still earn nearly 5% from U.S. government bonds.
