Bitcoin rallies as US Treasury expands long‑end bond buybacks amid $40 trillion debt milestone

Bitcoin surged from roughly $62,700 to $79,500 between August 17 and August 21, delivering a 27 % weekly gain – the best performance since March 2024. The rally coincided with a major policy move by the U.S. Treasury and a historic debt level.

Treasury buyback expansion

On August 19, the Treasury announced that the maximum per‑operation size for its long‑end liquidity‑support buybacks would increase from $2 billion to at least $4 billion for 10‑ to 30‑year securities, with the number of operations rising from two to four per quarter. The change takes effect on September 9, and Treasury Secretary Scott Bessent indicated the ceiling could be raised further.

Immediate market reaction

• 30‑year Treasury yield fell 9 basis points, pulling the dollar index to its lowest level since June.
• Gold rose 2.1 %.
• Bitcoin jumped 8.2 % within 12 hours, breaking its 200‑day moving average for the first time in nine months.

Institutional inflows into spot Bitcoin ETFs

Spot Bitcoin ETFs recorded record inflows during the same period. On August 20, BlackRock’s iShares Bitcoin Trust (IBIT) alone attracted $606 million, representing 82 % of all spot Bitcoin ETF inflows that day. Over the four‑day rally, roughly $1.9 billion flowed into spot Bitcoin funds, with eight of twelve listed products posting positive net inflows.

Short‑position squeeze

Crypto derivatives exchanges saw short liquidations totalling $3 billion in a 24‑hour window, affecting more than 170,000 traders – the largest squeeze since November 2021.

Fiscal‑fear narrative

Analysts view the Treasury’s buyback program as a signal that the U.S. government will prioritize liquidity provision over austerity when borrowing costs become unsustainable. The policy reduces long‑term yields, lowers the opportunity cost of holding non‑yielding assets, and injects cash into the financial system that can rotate into risk assets such as Bitcoin.

Scale of the buyback program vs. Bitcoin market

The Treasury plans a minimum of $16 billion in quarterly buybacks, or $64 billion annually. With Bitcoin’s market cap around $1.55 trillion at $78 000, the annual buyback volume equals roughly 4 % of Bitcoin’s total market value. Even a modest share of the resulting liquidity flowing into crypto could move Bitcoin’s price significantly.