Bitcoin rises 9.5% to $71.5K as Treasury doubles bond buybacks

Bitcoin rose 9.5 percent to $71,550 on Aug. 19 as the US Treasury doubled its long-dated bond buyback program, easing pressure on yields that had reached their highest since 2007.

The Kobeissi Letter, a markets analysis firm, described the move as the intervention it had been expecting since July 31, when long-term US borrowing costs first reached levels unseen since before the global financial crisis.

The Treasury will raise the maximum size of liquidity-support buybacks for longer-dated government debt from $2 billion to at least $4 billion per operation, effective September 9 through November 4. The 30-year Treasury yield, which touched 5.34 percent on Tuesday, dropped toward 5.20 percent after the announcement. More than $1 billion in derivatives positions were liquidated as BTC tapped almost $70,000, its highest since mid-June.

The intervention marks a new phase in the US government's management of its $40 trillion debt load, with interest payments now exceeding $1 trillion annually. For Bitcoin, the episode shows how sensitive the asset remains to shifts in bond yields, the dollar, and expectations for financial-market liquidity — with Bessent promising additional interventions.

The Bond Market's Breaking Point

The 30-year Treasury yield's climb to 5.34 percent on Tuesday came as persistent inflation concerns, heavy government borrowing, and worries about the US fiscal outlook converged. The national debt crossed $40 trillion this week, with nearly one in five dollars of government revenue going to interest payments on Treasury bonds.

The Treasury's buyback program should not be confused with Federal Reserve quantitative easing. These buybacks are designed to improve trading liquidity in older securities, and the additional purchases remain small relative to the enormous Treasury market. But the market's reaction was immediate: the 30-year yield dropped toward 5.20 percent, the 10-year yield moved lower, and the dollar weakened — pushing stocks, gold, and crypto higher.

What This Means for Bitcoin

Bitcoin's price action shows how tightly the asset tracks macro liquidity conditions. According to CryptoRank data, total crypto market cap rose to $2.54 trillion with BTC dominance at 56.51 percent. Spot volume reached $67.06 billion in 24 hours, up 38.4 percent from the prior day.

The Kobeissi Letter argued that the government has a strong incentive to prevent yields from rising indefinitely because its interest bill is becoming increasingly expensive. With the US set to borrow at least $2 trillion more this year — half of which will cover interest payments — pressure on the Treasury to intervene again remains high.

Bessent has already promised additional interventions. Bitcoin's divergent reactions to the first two interventions suggest traders are uncertain how future policy moves will affect the asset. With BTC now holding above $70,000 — the level that capped its two-month high — the next key test comes September 9, when the expanded buyback program takes effect.

This article is for informational purposes only and does not constitute investment advice.