U.S. Treasury Buys $6 Billion in Bonds, Bitcoin Drops Below $80,000

The U.S. Treasury purchased $6 billion worth of long-term bonds, but Bitcoin fell below $80,000. This contrasts with a 7% surge in Bitcoin following the bond purchase announcement in August. Contrary to expectations that the bond buyback would increase market liquidity, there was no sign of falling interest rates or increased buying pressure in the market. On the 27th, the Treasury fully bought back $6 billion in bonds maturing in 20 to 30 years. The bonds offered for sale amounted to $10.7 billion, approximately 1.8 times the actual purchase size. The Treasury paid between $52 and $71 for each $100 face value of the bonds, with approximately $3.8 billion in cash actually disbursed to the market. This purchase did not lead to a rebound in Bitcoin, which fell by 1.5% on the 29th. The difference in market reactions between August and October is attributed to the novelty of the policy. The October purchase was based on a previously announced schedule, and investors did not interpret it as a new signal for liquidity supply. The Treasury's bond buyback is different from the Fed's quantitative easing and does not guarantee an expansion of the money supply. The uncertainty in monetary policy remains unresolved as the Fed has kept interest rates unchanged. The Treasury plans an additional buyback of at least $4 billion on November 4.

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