The cryptocurrency market is waking up to a new wave of speculation after the U.S. Treasury staged one of the biggest bond buybacks in history, repurchasing $4 billion worth of government debt.
While the move injected liquidity into the system, analysts warn it also revealed deeper cracks in market stability.
Bond Buyback Raises Questions
Traders initially saw the Treasury’s action as a supportive signal. Analyst Kyle Doops called it “bullish fuel for risk assets,” while others suggested the government was willing to provide a backstop at a delicate moment.
But not everyone was convinced. According to Quinten François, investors attempted to sell the Treasury as much as $29 billion in debt—far more than it was willing to buy back. He argued the imbalance shows that investors are “desperate for liquidity” and that the Federal Reserve may eventually have no choice but to step in more aggressively.
“When the Fed does step in, Bitcoin could go vertical,” François added.
Powell’s Speech Could Set the Tone
The timing of the buyback is notable, coming just days before Federal Reserve Chair Jerome Powell is set to deliver his annual policy speech at the Jackson Hole Economic Symposium. Scheduled for August 22 at 10 a.m. EST, Powell’s remarks are expected to provide clearer guidance on the path of interest rates.
Despite the injection, Treasury yields edged higher on Thursday morning, with the 10-year yield rising to 4.308% and the 2-year yield at 3.76%. The uptick suggests that buybacks may not fully absorb the market’s heavy supply of bonds.
Traders are now pricing in an 80% chance of a rate cut in September, according to the CME FedWatch tool. But the Fed remains divided: minutes from the last FOMC meeting revealed the first double dissent in decades, as Christopher Waller and Michelle Bowman voted against holding rates steady, warning that tariffs and supply costs could reignite inflation.
Market Split Between Relief and Risk
For now, markets are caught in a tug-of-war: is the Treasury’s move the start of a broader easing cycle, or merely a temporary patch before more serious funding stress emerges?
Crypto traders, meanwhile, are watching closely. With liquidity injections often fueling risk assets, Bitcoin could be the next to react if Powell signals a shift toward easing.
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Source: https://coindoo.com/treasurys-4b-buyback-sparks-panic-is-bitcoin-about-to-explode/