Previously, U.S. Treasury yields remained stubbornly high, with the 30-year yield once hitting its highest level since 2007. This unfavorable macroeconomic environment put increasing pressure on U.S. stocks, especially previously soaring chip stocks, which experienced a significant pullback.
Then yesterday, the U.S. Treasury Department finally stepped in.
I. The Treasury Department Takes Action: Repurchase Cap Doubled Directly
The U.S. Treasury Department announced that from September 9th to November 4th, it will at least double the single-operation size cap for repurchases of 10- to 30-year U.S. Treasury bonds — from $2 billion to $4 billion.
In simple terms, this move means: The Treasury will spend more money to buy back its own previously issued, long-term Treasury bonds that are nearing maturity. The repurchase firepower is concentrated at the ultra-long end of the curve: the 10- to 20-year and the 20- to 30-year maturities.
Upon the news, the market reacted immediately: Long-term Treasury yields fell rapidly, with the 30-year yield dropping nearly 10 basis points at one point. U.S. stocks rose slightly in sync, and the entire cryptocurrency market, in particular, saw a long-awaited surge.
II. Why the Market Bought It: This is Doing the Fed's Job
The significance of this repurchase lies not only in its amount but also in its source.
The market widely interprets this operation as "the Treasury doing the Fed's job." The logic is this: The Fed is reluctant to directly print money to buy bonds, but long-term interest rates indeed need to be suppressed. Therefore, the Treasury steps in personally, using repurchases to directly inject funds into the market, pushing down long-end yields.
In terms of scale, the Treasury's repurchases are far from comparable to the Fed's quantitative easing. But the signal it sends is strong enough — the government is personally stabilizing the market. Sometimes, stabilizing confidence is more valuable than the funds themselves.
III. The Anomaly: Favorable News Lands, But U.S. Stocks Rise Half-heartedly
However, last night's trading session revealed a rather rare phenomenon.
Theoretically, with such favorable news, U.S. stocks should have soared. Yet the actual performance was mediocre: the three major indexes only closed slightly higher, and sector performance was extremely fragmented. The previously hottest storage and optical module sectors continued their correction, showing no reaction to this positive news, as if they never got the memo.
Instead, a role almost forgotten by the market suddenly stole the spotlight — Bitcoin surged unexpectedly, climbing from around $64,000 to briefly touch the $70,000 mark.
IV. Bitcoin's Unusual Move is Last Night's Most Important Signal to Read
Why did stocks show little appreciation for the Treasury's market stabilization, while Bitcoin went wild?
The answer lies in Bitcoin's longstanding role: it's a barometer of U.S. dollar liquidity. Stocks are priced based on earnings and narratives, while Bitcoin is most sensitive to whether "money in the market is loose or tight." The Treasury's bond repurchase is essentially replenishing liquidity within the system — while stocks are still digesting their own headwinds, Bitcoin has already priced in the warmth of increased liquidity.
This also explains the previous market structure. Over the past year or so, dollar liquidity has been relatively tight, with nearly all existing market funds sucked into the AI narrative, creating a situation of "AI stocks soar alone, everything else stagnates." Now the script has flipped: AI-related sectors are correcting, while Bitcoin suddenly rallies due to liquidity tailwinds.
For the broader market, this is actually good news. The recovery of liquidity won't always be confined to just one asset — when the tide rises, the entire U.S. stock market will ultimately benefit.
V. Final Thoughts
The Treasury's repurchase operation suppresses interest rates and stabilizes confidence; but the real signal revealing a shift in liquidity is that sharp, prominent bullish candlestick in Bitcoin.
The adjustment in the AI sector may not be over, but the market's underlying logic is shifting from "fighting for existing funds" back to "waiting for incoming funds." Once the money tap is turned back on, the stage for market moves might be much broader than it has been over the past month.
Disclaimer: This article was written by an external author and represents only the author's personal views. It does not represent the position, views, or investment advice of BIT. The information, data, and opinions involved are for reference only and do not constitute any form of investment, trading, financial, or other professional advice. Digital assets and securities markets carry relatively high risks. Market views and past performance do not represent future results. Investors should make independent judgments based on their own circumstances and bear the relevant risks.
