Bitcoin joined US stocks in a broad rally after the US Treasury announced that it was at least doubling the amount of its debt buyback operations from September.
Bitcoin (BTC) saw its highest levels since the start of June after Wednesday’s Wall Street open as markets reacted to a US government liquidity move.
Bitcoin surges as US bond yields fall on buyback plan
Data from TradingView showed BTC/USD passing $69,700 on Bitstamp, up 6% on the day.
BTC/USD one-day chart. Source: Cointelegraph/TradingView
US stock markets opened higher after the US Treasury Department announced that it would at least double the level of government debt buybacks, from $2 billion to a minimum of $4 billion per operation, beginning on Sept. 9.
The US 30-year bond yield, which had hit its highest level in nearly 20 years on Tuesday, fell immediately on the news and was at 5.19% at the time of writing, down 9bps.
“This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations,” an official press release stated.
US 30-year bond yields one-day chart. Source: Cointelegraph/TradingView
Increased debt buybacks mean that the US government will add liquidity as a buyer to the longer-term debt market. Earlier, analysts pointed to increasing corporate debt, especially in the AI sector, as one motivator of the yield surge.
“This is NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries,” Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, said, quoted by CNBC.
The announcement comes as US national debt approaches the symbolic milestone of $40 trillion. On Tuesday, trading resource The Kobeissi Letter noted that interest payments on the debt pile had reached $1.4 trillion over the past 12 months alone, tripling since 2020.
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