U.S. Treasury Buys Back $6 Billion as Bitcoin Cools Off
The buyback of long-dated Treasuries comes as the 10-year yield hits its highest level since 2002, while Bitcoin pulls back after topping $85,000.
Key Takeaways
- The U.S. Treasury used the full $6 billion limit for a bond buyback on Thursday.
- The 10-year yield rose to 5.342%, the highest level since April 2002, while Bitcoin fell back to $84,624.
- Higher rates and turmoil in the bond market remain relevant for crypto, because Bitcoin is increasingly moving with U.S. macro news.
The U.S. Treasury on Thursday used the full $6 billion limit for a bond buyback. At the same time, the 10-year yield climbed to 5.342%, the highest level since April 2002. That move came alongside a cooling Bitcoin price, which slipped back to $84,624 after topping $85,000 (€75,200).
Buyback of Long-Dated Debt
In a buyback, the government repurchases its own bonds before they mature. Treasury received bids for $46.4 billion (€41.1 billion) in debt, but accepted only $6 billion (€5.3 billion) of it, spread across two of the 41 eligible bonds.
These were securities with a low coupon and maturities in 2041 and 2042. Treasury paid about $67 (€59) and $76 (€67) per $100 (€89) of face value. That means retiring that $6 billion (€5.3 billion) in debt cost roughly $4.47 billion (€4 billion) in cash.
The operation is part of a larger program aimed at supporting the long-dated bond market. Since August 19, the size of these buybacks has been increased from $2 billion (€1.8 billion) to at least $4 billion (€3.5 billion) each time, with a window running from September 9 to November 4.
Rates Keep Hitting the Crypto Market
Higher rates make borrowing more expensive for households, companies, and the federal government. That also matters for crypto, because Bitcoin has struggled to hold onto gains in recent days while rates kept moving higher.
The pressure on the bond market is tied to several factors, including higher deficits, inflation that remains above target, and heavy financing by tech companies for AI. Recent turmoil in the bond market is also making investors pay close attention to new data, such as Friday's jobs report.
Why This Matters for Bitcoin
For European crypto followers, this is especially relevant because Bitcoin is increasingly moving with macro news from the U.S.. A rate above 5% can quickly change the mood in risk markets, even if it does not automatically say anything about BTC's direction in the short term.
That fits the picture of Bitcoin currently moving mostly within its current range; recent trading between $82,000 and $85,000 also showed how sensitive the price is to new macro triggers. ARK Invest CEO Cathie Wood previously called a 10-year yield above 5% a sign of a functioning market. That shows there are also different takes within the market on the same rise in rates.
