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BTC Bitcoin breaks through US$74,427, and the U.S. Treasury Department's expansion of long-term bond buybacks attracts market attention
Bitcoin (BTC) climbed to US$74,427 after the U.S. Treasury Department increased the limit on long-term bond buybacks. The move prompted VanEck to believe that the cryptocurrency is once again being traded as a hedge against the weakening of the U.S. dollar.
Key Points:
Bitcoin prices hit $74,427 after the U.S. Treasury Department raised the cap on each round of long-term bond buybacks from $2 billion to at least $4 billion.
VanEck's Matthew Siegel said fiscal concerns and a weak dollar are better explanations for the rise than expectations of the CLARITY Act.
Bitcoin's historical correlation with stocks during periods of market stress complicates its claim as a reliable hedging tool.
Bitcoin and Treasury Action
The U.S. Treasury doubled the limit on long-term bond repurchase from $2 billion to at least $4 billion per round, a change that compressed yields and fueled a broader round of risk appetite. Bitcoin rose accordingly, and this rise also triggered a massive short squeeze.
Forced short liquidations of approximately $3 billion amplified this trend, providing impetus for Bitcoin to break through $74,000. These liquidations occurred in a broader risk-appetite reaction following the Treasury announcement that squeezed yields and turned attention to the weakness of the dollar. Siegel said price movements reflect concerns about U.S. fiscal policy rather than enthusiasm surrounding the CLARITY Act, a cryptocurrency market structure bill still under consideration in Congress.
Coinbase CEO Brian Armstrong has said he expects the bill to garner 60 votes in the Senate, while predicting that the market sees little chance of the bill becoming law this year. Siegel believes the gap helps explain why the latest Bitcoin rally is driven by other factors rather than pending cryptocurrency legislation.
VanEck's hedging argument
"Bitcoin is one of the best hedging tools for this dynamic," Siegel said in an interview with CNBC. His argument is that pressures on U.S. finances and the dollar can increase demand for scarce assets outside the traditional monetary system. This argument is not unfamiliar, but Bitcoin's historical performance has been unstable.
Bitcoin's correlation with U.S. stocks rose during the COVID-19 crash in 2020 and rose again during the 2022 rate hike cycle, rather than falling during these periods of market stress. Academic research has documented this pattern. In a 2008 white paper, Satoshi Nakamoto described Bitcoin as a fixed-supply alternative to a financial system that relies on central bank money creation, but subsequent market cycles have repeatedly shown that when liquidity tightens, Bitcoin trades behave more like a risky asset. This history keeps discussion of hedging arguments open.
