Key Takeaways
- The US Treasury tripled its long-term bond buyback cap from $2 billion to $6 billion.
- The 10-year Treasury yield still climbed above 4.85%, its highest level since November 2023.
- A sustained rise in the 10-year yield above 5% could add pressure to Bitcoin’s attempted breakout above $80,000.
Bitcoin slipped toward $78,000 as long-term US Treasury yields climbed despite the government tripling the maximum size of an upcoming bond buyback operation to $6 billion.
The 10-year Treasury yield moved above 4.85%, its highest level since November 2023, after gaining roughly 15 basis points from levels recorded before the announcement.
Bitcoin traded near $78,110, down about 1.4% over 24 hours, after reaching an intraday high of $79,701.
The move suggests that investors remain focused on inflation, government borrowing, and the economic effects of the Iran conflict rather than on the Treasury’s attempt to improve liquidity in the bond market.
Treasury Raises Long-Term Buyback to $6 Billion
The Treasury’s updated schedule set a maximum purchase amount of $6 billion for a Sept. 10 liquidity-support operation covering nominal bonds with maturities between 10 and 20 years.
That triples the previous $2 billion cap. The Treasury had announced in August that it would at least double the size of long-term operations to $4 billion through the end of the current refunding quarter on Nov. 4.
Buybacks allow the Treasury to repurchase older, less liquid securities. The program aims to improve market functioning rather than inject monetary stimulus or permanently reduce government debt.
The distinction matters because the Treasury finances its purchases by issuing other securities. The operation changes the composition of debt in circulation but does not eliminate the government’s underlying borrowing needs.
That helps explain why yields can continue rising even as the Treasury increases buybacks. Bond prices and yields move in opposite directions, so the jump above 4.85% signals that investors still demand greater compensation to hold long-term US debt.
Iran War and Oil Prices Fuel Inflation Fears
Geopolitical risk has added another layer of pressure. The 10-year yield has risen by nearly one percentage point since the Iran war began, according to market commentary cited by the Kobeissi Letter.
Oil prices have also climbed above $100 per barrel as markets assess threats to Middle Eastern supplies. Higher energy costs can ripple through transportation, manufacturing, and consumer prices, complicating the Federal Reserve’s fight against inflation.
Investors may respond by reducing expectations for interest-rate cuts or pricing in further tightening. Both scenarios can push Treasury yields higher.
Demand at the latest $39 billion 10-year note auction remained strong, however. The securities cleared at 4.834%, the highest auction yield since 2007, while the bid-to-cover ratio reached 2.71. That indicates buyers still want Treasuries, albeit at substantially higher yields.
Why Rising Treasury Yields Pressure Bitcoin
Higher bond yields create two problems for Bitcoin. First, they raise the return available on government debt, making risk-free assets more competitive against a volatile asset that produces no contractual income.
Second, rising yields increase borrowing costs and tighten financial conditions. That can reduce liquidity across equities, crypto, and other speculative markets.
Bitcoin’s reaction remained relatively contained, but a sustained move in the 10-year yield above 5% could intensify selling pressure. BTC also faces technical resistance near $80,000 after recovering from its summer low around $59,100.
The Treasury’s intervention may improve liquidity in specific long-term securities, but it cannot resolve inflation, fiscal, or geopolitical concerns on its own.
For Bitcoin, the next direction may depend on whether oil prices and inflation expectations ease. Until then, rising yields threaten to limit the cryptocurrency’s attempt to establish a durable breakout above $80,000.
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
