Bitcoin climbed to $69,500 on Wednesday after the US Treasury said it would double the size of its buyback operations for long-dated government debt. The move pushed the 30-year Treasury yield down from a 2007 high and sent Ethereum above $2,000 for the first time since June. But the sharp repricing also wiped out more than $400 million in crypto positions within an hour.
Treasury's bigger buyback
The Treasury raised the maximum size of buyback operations for 10-20 and 20-30 year securities from $2 billion to at least $4 billion per operation, starting Sept 9 through Nov 4. The agency said the increase aims to provide greater liquidity support in longer-dated nominal sectors. The move follows a sharp repricing at the long end of the Treasury curve due to inflation, heavy government borrowing, and increased corporate issuance tied to AI investment.
These buybacks are not quantitative easing. They don't reduce the government's overall debt burden. But they do inject demand into a part of the market that has been under pressure.
Market reaction
The 30-year Treasury yield fell to about 5.19% from Tuesday's 5.34% peak, its highest since 2007. The 10-year yield dropped to 4.647%. Bitcoin responded by jumping to $69,500, while Ethereum rose as high as $2,100.
The relief was real, but it came with a violent shakeout. More than $400 million in crypto positions were liquidated within one hour, with short traders losing about $382 million. Over the past 24 hours, 83,832 traders were liquidated for over $662 million. The largest single liquidation was an $18.73 million BTC-USD position on Hyperliquid.
Andre Dragosch, head of research at Bitwise Europe, said the system is showing first signs of cracking, and Bitcoin is the canary in the macro coal mine. Matt Cole, chief investment officer at Strive, said pressures could strengthen Bitcoin's thesis if debt leads to lower real rates, greater liquidity, and currency depreciation. He sees the dollar in structural decline and expects a stronger macro tailwind for Bitcoin in the next 5-7 years.
The buyback operations run from Sept 9 through Nov 4. Whether the added liquidity support will hold down long-dated yields remains an open question, but for now the market is reading it as a green light for risk assets.
