Bitcoin Stalls as Treasury Buyback Fails to Lower Yields
Bitcoin failed to repeat its August rally after the US Treasury increased its liquidity-support buyback for longer-dated government debt from $4 billion to $6 billion. In August, an unexpected increase from $2 billion to $4 billion helped push BTC from about $65,000 to $80,000 as Treasury yields fell and expectations for improved market liquidity lifted risk appetite.
The latest announcement was largely anticipated, and the $6 billion operation was below some Wall Street estimates of up to $10 billion. Bond-market pressures also intensified. The 10-year Treasury yield rose to 4.85%, its highest level in almost three years, while 20-year and 30-year yields reached about 5.30%.
Rising oil prices, renewed inflation concerns, strong employment data and hawkish expectations for Federal Reserve policy have supported higher yields. The Kobeissi Letter warned that the 10-year yield could exceed 5% if these conditions persist.
Bitcoin dropped below $78,000 and struggled to recover. The episode suggests that the crypto market is reacting less to the buyback itself than to its effect on yields, liquidity and broader risk appetite. Persistent high yields could continue to pressure Bitcoin and other risk assets in the short term.
Bearish
The expected market impact is bearish because the Treasury buyback has not produced the yield decline or liquidity boost that previously supported Bitcoin. In August, the surprise announcement helped drive BTC higher by lowering long-term yields and improving risk appetite. This time, the move was anticipated, its size fell short of some expectations, and the bond market pushed yields higher instead.
The 10-year Treasury yield at 4.85% and the possibility of a move above 5% create a stronger opportunity cost for holding non-yielding assets such as Bitcoin. Higher yields can also tighten financial conditions, reduce leverage and encourage traders to rotate toward cash and government debt. Inflation concerns, stronger employment data and hawkish Federal Reserve expectations add to this pressure.
In the short term, Bitcoin may remain sensitive to Treasury yields, oil prices, Federal Reserve rate expectations and risk sentiment. A sustained break above 5% in the 10-year yield could trigger additional selling across cryptocurrencies, while a reversal in yields or a larger-than-expected liquidity intervention could support a relief rally. Longer term, Treasury buybacks may become bullish if they successfully stabilise the bond market and improve liquidity, but the current reaction shows that policy headlines alone are unlikely to lift Bitcoin without confirmation from broader macro indicators.