Bitcoin jumped past $81,000 this week, hitting a three-month high after the US Treasury said it would at least double buybacks of longer-dated Treasuries, from $2 billion to $4 billion per operation. The move, aimed at improving liquidity in the long end of the bond market, sent the dollar to a multi-month low and pushed gold above $4,600 an ounce.
The Treasury's bigger buyback
The Treasury's plan, announced early in the week, was meant to ease pressure in the long end of the bond market. Yields initially declined, and bitcoin and gold both jumped from around $64,000 to $70,000 in short order. But long-term yields rebounded almost immediately. Bitcoin didn't care — it kept climbing another $10,000 to $11,000.
Why bitcoin kept rising
Analysts at the Kobeissi Letter argued that investors read the Treasury intervention as evidence of growing fiscal pressure in the US. That's a lot of weight for one announcement, but the numbers back it up: federal debt recently crossed $40 trillion. When the government starts buying its own bonds to keep the market moving, it's not hard to see why money might look for somewhere else to sit.
The gold and dollar moves
Gold broke above $4,600 during bitcoin's run, and the dollar hit a multi-month low. Ray Dalio, the Bridgewater founder, has been warning about a potential US debt crisis, suggesting gold and 'a bit of bitcoin' as hedges. It's a comment that gained a little extra resonance this week.
ETFs and liquidated shorts
Spot bitcoin ETFs saw nearly $2 billion in inflows over five days, the most in three months. At the same time, more than $4 billion in leveraged short positions were wiped out in less than two days, adding fuel to the rally. When shorts get squeezed like that, the price can run further than anyone expects.
What happens next is unclear. The Treasury's buyback schedule is already set, but whether it sticks with the larger size is a question the market will be watching closely. Bitcoin's move has been fast, and fast moves can correct just as quickly.
