Bitcoin's key move towards $80,000 is repeated: Why is BTC stagnant?

Why did the U.S. Treasury's repurchase program fail to boost Bitcoin again?

The U.S. Treasury Department announced that it would increase the repurchase of long-term treasury bonds to US$6 billion, a move that appears to be an "enhanced version" of last month's move to drive Bitcoin's rapid rise. However, BTC did not rise as expected, but fell below the US$78,000 mark and appeared to be struggling to regain that level.

Looking back on August 19, when the repurchase limit was raised from US$2 billion to US$4 billion, both Bitcoin and gold were supported, and long-term government bond yields fell accordingly. On September 9, although the repurchase amount further increased to US$6 billion, the yield on the 10-year U.S. bond rose to 4.85%, and the 20-year and 30-year yields also hit approximately 5.30% respectively.

Why did the same policy have diametrically opposed effects this month?

What did the U.S. Treasury do?

The U.S. Treasury Department expands its long-term Treasury bond repurchase program to support its liquidity. By buying old bonds, the government hopes to facilitate the smooth flow of market transactions and relieve pressure on the long-term bond market.

A surprise announcement on August 19 increased the repurchase limit from 2 billion to US$4 billion. Markets saw this as a surprise signal of policy easing, causing bond yields to fall and bitcoin and gold to rise rapidly. Therefore, investors are not focusing on the repurchase itself, but on how it changes financial conditions.

Why did Bitcoin fail to rise on September 9?

This time, the Ministry of Finance increased the repurchase scale to US$6 billion, but the market expected the water level to be higher. Some analysts had speculated that the repurchase size could be as high as $10 billion. As a result, the $6 billion increase failed to produce as strong a surprise effect as in August.

In addition, the 10-year bond yield rose to 4.85% on the same day, and the 20-year and 30-year yields also reached about 5.30%. For Bitcoin, the key point of disagreement is that the Treasury is trying to support the bond market, but yields have not fallen, but have continued to rise.

Why are Treasury yields so important to Bitcoin?

Falling yields on long-term government bonds usually means a looser financial environment, which will help increase the attractiveness of risky assets, including Bitcoin. The market reaction after the August repurchase announcement was based on this expectation. However, this increase in yields has led to a tightening of the financial environment.

Kobeissi Letter pointed out that the bond market appears to be "resisting" Treasury operations and warned that if current conditions persist, the 10-year yield could exceed 5%. Therefore, the question facing Bitcoin is not just whether the $6 billion repurchase is enough, but also how effectively the bond market prices the move.

How can oil prices and Fed expectations exacerbate the dilemma?

There is a broader macro background behind the rise in government bond yields. As the conflict between the United States and Iran continued, oil prices once approached the US$100 mark. Rising energy costs have revived market concerns about inflation.

Coupled with recent strong jobs data and comments from hawkish officials such as Kevin Warsh, markets have begun to price more on the probability that the Federal Reserve may raise interest rates on September 16. Higher oil prices have pushed up inflation expectations, coupled with an increased possibility of interest rate hikes, limiting the Treasury's efforts to drive down bond yields.

What are the key data currently determining the trend of Bitcoin?

The Treasury's $6 billion repurchase itself has not become a decisive factor in the direction of Bitcoin. If the positive pricing effect of August is to be repeated, the trend of bond yields becomes increasingly critical. Currently, the market's attention has focused on the yield of 10-year treasury bonds and the Federal Reserve's interest rate decision expectations.

U.S. inflation data released on Friday could trigger a new round of pricing fluctuations as Bitcoin attempts to hold on to the $78,000 mark. If inflation data is higher than expected, it will strengthen the possibility of raising interest rates, which in turn will increase upward pressure on bond yields.

To sum up, the Treasury Department's actions to support Bitcoin last month have not worked this time. Because what drives the market is not just the amount of bonds the Treasury purchases, but how this move interacts simultaneously with oil prices, inflation expectations, bond yields, and Fed policy expectations.

Note: This content is based on general market data and does not constitute investment advice. Readers are advised to conduct independent research.