US Treasury buyback plan lifts bitcoin and gold, weakens dollar
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The US Treasury's announcement to double long-term Treasury buybacks starting September 9 sent bitcoin and gold sharply higher and weakened the dollar. The move failed to calm stock and bond markets, with 10- and 30-year yields continuing to rise. Bitcoin gained over 22% for the week, trading near $77,300.
Key Facts
- The US Treasury announced plans to double long-term Treasury buyback operations starting September 9.
- Bitcoin traded near $77,300, gaining more than 22% for the week.
- Gold broke above its 200-day moving average around $4,518 per ounce, a technically positive signal.
- SPDR Gold Shares attracted $1.3 billion on August 19, its largest daily inflow since mid-January.
- The 10-year Treasury yield reached 4.737% and the 30-year yield hit 5.276%.
Treasury Buyback Shock
The US Treasury's August 19 announcement to double long-term Treasury buybacks from September 9 shocked markets and intensified concerns about dollar debasement. The move failed to calm stock and bond markets, with 10- and 30-year Treasury yields continuing to rise. Stephen Coltman, head of macro at 21shares, called the Treasury announcement the main catalyst for bitcoin's surge. A meeting between President Donald Trump and crypto industry leaders at the White House, along with optimism around the Clarity Act, also supported the rally.
Debasement Trade Returns
Rising bitcoin and gold prices alongside a weaker dollar and higher bond yields signal a revival of the so-called debasement trade. Investors buy hard assets like gold, silver, and bitcoin on expectations that budget deficits and inflation will continue to erode the dollar's value. Bitcoin's fixed supply positions it as a hedge against dollar weakness, even though it is a fully digital currency. Keith Lerner, analyst at Truist Wealth, noted gold benefited from the weaker dollar and broke above its 200-day moving average near $4,518 per ounce.
Bond Market Stress
The 10-year Treasury yield reached 4.737% and the 30-year yield hit 5.276%, returning to levels seen before the Treasury announcement. Rising long-term yields heightened concerns about higher borrowing costs for consumers, companies, and the US government, whose debt exceeds $40 trillion with annual interest payments above $1 trillion. Ian Lyngen, head of rates strategy at Bank of Montreal, said there is collective skepticism that the Treasury buyback adjustment changes the fundamental drivers of the recent bond selloff. Global gold prices exceeded $4,600 per ounce during the current week.
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US Treasury buyback plan lifts bitcoin and gold, weakens dollar
