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Mr.Arshman

08/20 10:18

Bitcoin jumps 8.7% after Treasury buyback plan sen

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On August 19, the U.S. Treasury announced that starting September 9, it will at least double its long-end buybacks, and Bitcoin surged as much as 8.7%, reaching an intraday high of $69,749. Bitcoin’s biggest daily move since March 4 occurred not because of a cryptocurrency-related development, but due to a government announcement regarding debt management. Bitcoin’s rally conforms to a simple macroeconomic thesis: larger Treasury buybacks put some downward pressure on long-term yields. If that downward pressure results in a significant drop in benchmark yields, it can lead to weakening of the dollar, relaxation of financial conditions, and a decline in the opportunity cost of holding Bitcoin. The use of the word “if” is significant in this context. According to Treasury officials, this program has been designed to boost liquidity in older bonds, not deliver monetary stimulus. However, the scale of the program remains insignificant compared to the overall Treasury market. Markets initially followed that chain almost step by step. Long-dated U.S. yields fell as much as 10 basis points, the 10-year yield dropped about 6 basis points to 4.66%, and the dollar index lost 0.84% to 98.80. Gold jumped 4.05%, while Bitcoin was up 6.06% at Reuters’ market snapshot before reaching its higher intraday peak reported by Decrypt. This does not mean that the process can be termed “QE Lite” from a technical perspective. Quantitative easing (QE) is defined as the acquisition of assets by a central bank and expansion of its balance sheet, while the buying of Treasury securities is an operation in debt management. Nevertheless, the difference is of little importance for Bitcoin traders in the short run if the market reacts with lower yields and a weaker dollar. Positioning played a hugely significant role in the move. According to CoinGlass data mentioned in Decr
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