21.08.2026 16:10
Bitcoin has risen above $79,000, heading for its strongest weekly gain since March 2023. The Treasury decision that triggered the rally, contrary to popular belief, is not based on the creation of new money.
Bitcoin (BTC) rose to $79,400 on Friday. The cryptocurrency has gained approximately 24% since Monday and has risen for five consecutive days.
The U.S. Treasury Department announced it will increase the buyback cap on long-term government bonds from $2 billion to at least $4 billion per operation. The program will begin on September 9 and run through November 4.
Buybacks do not print new money into the market. The main market mover was not the size of the program, but the message that the administration could intervene in the rise in long-term rates with more forceful tools.
DECISION COMPARED TO 2011 METHOD
Lance Roberts, chief investment strategist at RIA Advisors, described the move as a new version of the program implemented by the U.S. Federal Reserve (Fed) in 2011. According to Roberts, issuing short-term bonds to buy long-term bonds is not an unusual practice. In the Fed's 2011 operation, it sold short-term bonds while buying long-term ones, thus attempting to alter the yield curve without injecting fresh money into the market.
At this point, it is necessary to distinguish between quantitative easing and yield curve control. In quantitative easing, the central bank creates reserves out of thin air, buys bonds, and injects fresh liquidity into the financial system. Only the Fed can do this. In yield curve control, the central bank sets a cap on long-term bond yields and commits to buying as many bonds as needed to maintain that level. The U.S. implemented a form of this method between 1942 and 1951. The Bank of Japan also conducted an explicit operation targeting 10-year bond yields between September 2016 and March 2024.
30-YEAR YIELD RETURNS TO 5.25%
The volume of buybacks remains small both in absolute terms and relative to net bond supply. This step is interpreted as the administration seeking temporary solutions to suppress rates rather than addressing the budget deficit.
The movement in the bond market shows that the initial impact of the buybacks has been limited. The 30-year bond yield, which fell from 5.30% to 5.18% on Wednesday, has returned to 5.25%. ING analysts noted that the buybacks are a zero-sum operation and are not expected to significantly alter the natural upward trajectory of long-term yields.
The timing of the announcement is also notable. The decision came during a period when bond yields are at their highest since 2007. Treasury Secretary Scott Bessent stated they have a broad toolkit, indicated that part of the step was for signaling purposes, and expressed their belief that yields do not reflect fundamental indicators. Ole Hansen, head of commodity strategy at Saxo Bank, noted that the announcement shows the Treasury is becoming increasingly sensitive to liquidity conditions and upward pressure on long-term borrowing costs.
Mohamed El Erian, advisor at Allianz, argued that the move is more about the possibility of broader implementation of yield curve control than the buyback itself. Broad-scale implementation of yield curve control could require Fed balance sheet growth and more liquidity entering markets. In a Deutsche Bank assessment, the announcement was described as a form of soft fiscal repression. Fiscal repression defines policies that artificially keep public borrowing costs low and erode the real value of debt over time. This scenario works in favor of assets like gold and Bitcoin.
LIQUIDATIONS FALL TO $1.24 BILLION
Pressure in the derivatives market has eased. According to CoinGlass data, $1.24 billion in positions were liquidated in the last 24 hours. This amount is 62% lower compared to Wednesday's peak of $3.3 billion. $1.06 billion of the liquidations came from short positions again, and a total of 152,586 traders lost their positions.
Investor positioning presents an interesting picture. The long/short account ratio for Bitcoin stands at 0.865, meaning there are still more accounts on the short side. Accounts on the short side have been positioning against the rally for four days, but the price action is moving contrary to this expectation. Therefore, the fuel needed for a squeeze wave is not considered entirely exhausted.
Open interest is also rebuilding rapidly. Market-wide open interest rose 6.17% to $139.37 billion. In Bitcoin futures, the increase was 7.38% to $57.7 billion. Funding rates have risen to 0.013%, marking the highest level since January.
Bitcoin has also surpassed the $76,000 target indicated by the technical formation created since the June lows. The formation's $76,000 target has been achieved, and the relative strength index is in overbought territory, so a short-term pullback could be on the horizon.
On the altcoin side, Bitcoin's dominance has risen to 59.9%. Ethena rose 13%, and Zcash rose 12.5%, outperforming Bitcoin. XRP gained 19%, the best performance among major cryptocurrencies, with trading volume up 139% and open interest up 15.5%. Chainlink also rose 8.2%, bringing its weekly gain to 32%.
CryptoQuant data is signaling a turning point on the demand side. The firm's 30-day spot demand indicator has recovered from -206,000 Bitcoin on July 23 to around -5,000, reaching the threshold of turning positive for the first time since February 26. According to the firm, when this indicator has turned from negative to positive in the past, the median gain for Bitcoin over the following 60 days was 18%. CryptoQuant also reminds that the sample size is small and the signal needs to be completed first.