Bitcoin Surges as Treasury Buybacks Stoke Liquidity Hopes

Long-dated U.S. Treasury yields have climbed to their highest levels in nearly two decades, raising federal borrowing costs and weighing on non-yielding assets such as bitcoin. The Treasury’s buyback program is designed to improve liquidity in older bonds, using existing cash or proceeds from short-term debt issuance. It neither creates bank reserves like Federal Reserve quantitative easing nor commits to a yield ceiling under yield curve control.

The U.S. Treasury said on Aug. 19 that, from Sept. 9 through Nov. 4, it will raise the cap on each liquidity-support buyback of 10-to-20-year and 20-to-30-year nominal securities to at least $4 billion from $2 billion. Investors viewed the move as a sign that officials are increasingly sensitive to elevated long-term yields and may ultimately deploy stronger measures. Bitcoin surged past $77,000, gaining more than 23% for the week in its biggest weekly advance since March 2023.