Bitcoin Approaches $70,000 After Treasury Announces Buyback Expansion

Bitcoin prices rallied sharply on Wednesday, approaching $70,000 after the U.S. Treasury announced an expansion of its existing program to purchase long-term bonds.

The world’s most valuable digital currency climbed to $69,698.00 around 11:30 a.m. EDT, according to Coinbase data from TradingView.

At this point, the cryptocurrency was up roughly 8.7% from its intraday low of $64,112.04, additional Coinbase figures from TradingView reveal.

Past that, it had increased more than 8% in the space of only three hours, having traded near $64,400 around 8:30 a.m. EDT.

When asked what caused these price movements, multiple analysts pointed to the U.S. Treasury announcement.

“The clearest catalyst was the U.S. Treasury announcing that it will at least double the size of certain long-term bond buybacks from $2 billion to $4 billion per operation,” Benjamin Sarquis Peillard, founder and CEO of credit marketplace Cap, said via email.

“That helped push the 30-year Treasury yield down from a 19-year high of roughly 5.34% to as low as 5.187%, while the dollar weakened and equities rebounded,” Sarquis Peillard said. “Lower yields generally make risk assets more attractive and ease some of the financial conditions that had driven the earlier selloff.”

“The bigger takeaway is that Bitcoin is increasingly trading within the broader macro environment: moves in rates, liquidity and the dollar can quickly feed through to crypto markets,” Sarquis Peillard added.

Tim Enneking, managing partner of Psalion, also chimed in, emphasizing, among other things, the impact of the news from the U.S. Treasury.

“The proximate cause, as it were, for BTC’s jump was the US Treasury announcement that it would increase the buyback of long-date bonds,” he said via emailed commentary. “This harkens back to the COVID QE days and makes money cheaper (in the short term, at least).”

“Once a move was triggered, the cord holding back the ‘coiled spring’ of BTC, which was keeping it a tight trading range for the past several months, was cut,” Enneking said. “Add a clear short squeeze to the mix and you have the perfect recipe for a major upward move,” he added, referring to an upward move that causes short positions to be closed, amplifying a price increase.

William Stern, founder of Cardiff, offered his take on the matter. “This wasn’t about anything new happening in crypto. It was oversold” he said in an email.

“Once it cleared $65K, short sellers had to scramble to cover, and that’s what turns a bounce into a 9% swing in a few hours,” Stern said. “Markets stretched this far in one direction tend to snap back just as hard.”