The U.S. Treasury Department announced it would more than double its planned purchases of longer-term government debt, catching markets off guard this week.
The move was designed to calm bond markets following a sustained selloff that had pushed yields sharply higher, making U.S. debt appear increasingly risky to investors.
The Treasury said it would increase buyback operations in the longest-dated government bonds to $4 billion per operation, up from $2 billion previously.
Officials framed the decision as providing “greater liquidity support” in that part of the market, with larger buybacks set to begin September 9.
The announcement helped pull the 30-year Treasury yield back from 5.34%, a 19-year high, down to approximately 5.19%, offering relief to rattled bond investors.
Markets responded almost immediately, with the dollar selling off sharply and investors rotating into alternative assets including gold and bitcoin.
Gold climbed more than $100 on the day, while bitcoin pushed back above $68,000 before extending its rally dramatically through the end of the week.
Deutsche Bank described the Treasury’s maneuver as a “soft form of financial repression,” a term referring to policies that artificially suppress government borrowing costs, often below inflation.
Financial repression erodes the real value of debt and savings over time, a dynamic that has historically been considered bullish for hard assets like gold and bitcoin.
Bitcoin had been trading in a narrow range between $62,000 and $67,000 for several weeks, drawing a significant number of short sellers betting the price would remain suppressed.
When Treasury yields fell and the dollar weakened following the announcement, bitcoin blasted through that upper resistance level of $67,000, catching bearish traders off guard.
Investors who had shorted bitcoin were forced to buy back the digital asset to close losing positions, adding significant upward pressure to an already climbing price.
By Thursday and Friday, more than $4 billion in bearish crypto positions had been liquidated as the rally accelerated, amplifying bitcoin’s gains well beyond the initial move.
Bitcoin surged approximately 25% from Wednesday’s levels, pushing past $78,000 during Asian morning hours on Saturday as the liquidation cascade continued.
Adding further momentum to the crypto market, President Donald Trump urged Congress to move quickly on crypto legislation on the same day as the Treasury announcement.
Trump, who reportedly earned approximately $1.2 billion last year from various crypto holdings, has been a vocal advocate for advancing digital asset policy on Capitol Hill.
The Treasury’s buyback program works by repurchasing older government debt, which improves trading conditions and liquidity in less actively traded corners of the bond market.
While the program does not constitute new stimulus or debt cancellation, increased bond-market liquidity can still loosen broader financial conditions in meaningful ways.
Investors closely watch such shifts alongside yield movements, dollar strength, and monetary policy expectations when positioning across assets like gold and bitcoin.
Further guidance on future purchase sizes is expected at the Treasury’s next quarterly refunding announcement scheduled for November 4.
