Treasury's latest measure isn't QE or YCC. Still, bitcoin is skyrocketing. Here's why.
Bitcoin prices are surging as the US Treasury increases its bond buyback program, a move analysts compare to 'Operation Twist'. While not direct money printing, the market interprets the Treasury's actions as a signal of liquidity management, driving interest in hard assets.
Why it matters
Understanding the relationship between government fiscal policy and crypto market volatility is essential for investors navigating current macroeconomic conditions.
The new measure doesn’t print money “out of thin air” and isn't quantitative easing (QE) or yield curve control (YCC) — two of the biggest tools governments and central banks have for pumping money into markets. Both have a long track record of triggering unprecedented risk-taking across financial assets, crypto included.
Still, hard assets like bitcoin BTC $ 75,582.18 and gold are rallying, and the dollar is depreciating against major currencies. BTC has jumped past $77,000, up 23% for the week, which is the largest weekly gain since March 2023, according to CoinDesk data.
The reason isn't really about what the Treasury is doing. It's about what the move is telling the market.
Starting Sept. 9 and running through Nov. 4, the Treasury will buy back $4 billion or more of its own long-duration (10 to 30 years) bonds on multiple occasions, double the previous $2 billion cap.
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