Bitcoin surged past $72,500 on Wednesday, reaching its highest level in roughly two months as investors reacted to a US Treasury decision to expand liquidity-support operations in the longer-dated government bond market.
Follow Times of Karachi on Google News and add as a preferred Source on Google
Bitcoin briefly approached $72,613, marking its strongest level since mid-June, while the move triggered significant volatility across cryptocurrency derivatives markets. More than $3 billion in crypto positions were reportedly liquidated as the sharp rally caught leveraged traders off guard.
The rally came after the US Department of the Treasury announced that it would at least double the maximum size of its liquidity-support buyback operations for longer-dated nominal coupon securities.
The maximum size of each operation will increase from $2 billion to at least $4 billion, beginning September 9. The expanded programme will remain in effect through November 4, covering the remainder of the current refunding quarter.
The Treasury said the increase was intended to provide greater liquidity support to longer-dated sectors where it has seen strong participation from market participants.
The announcement came amid elevated pressure in the US Treasury market.
The 30-year Treasury yield reached 5.34% on Tuesday, its highest level since 2007, amid persistent inflation concerns, heavy government borrowing and growing concerns about the US fiscal outlook.
Following the Treasury announcement, the 30-year yield moved down toward 5.20%, while the 10-year yield also declined. The move helped lift several risk assets, including stocks, gold and cryptocurrencies, while the US dollar weakened.
Lower bond yields can make non-yielding assets such as gold and Bitcoin relatively more attractive to investors. The Treasury’s decision is not the same as the Federal Reserve implementing quantitative easing (QE).
Treasury buybacks are generally designed to improve liquidity and trading conditions in older government securities. Nevertheless, the larger buyback operations have been interpreted by some market participants as a signal that authorities are becoming more attentive to stress in the longer-term bond market.
The Kobeissi Letter argued that the move represented an intervention it had anticipated amid rising long-term borrowing costs.
For Bitcoin, the development highlights the cryptocurrency’s growing sensitivity to bond yields, the US dollar and broader financial-market liquidity conditions.
Follow the Times of Karachi channel on WhatsApp
The Bitcoin rally also came as the US Securities and Exchange Commission (SEC) proposed a new regulatory framework that could facilitate certain crypto-asset offerings tied to investment contracts.
Under the proposed framework, two tailored exemptions could allow qualifying issuers to raise up to $5 million over four years or $75 million annually, subject to disclosure requirements.
Meanwhile, several cryptocurrency executives were scheduled to meet with US President Donald Trump at the White House, adding to the positive sentiment surrounding the sector.
