Analysis: Bitcoin soars to an 11-week high, possibly due to the U.S. Treasury increasing its bond buyback

According to Cointelegraph, driven by the U.S. Treasury's expansion of the national debt repurchase scale and improved market liquidity expectations, Bitcoin surged significantly after the U.S. stock market opened on Wednesday, reaching its highest level since June 2.

Previously, the U.S. Treasury announced that starting from September 9, it would expand the scale of long-term national debt repurchase operations, increasing the single repurchase limit from $2 billion to at least $4 billion. This move is seen by the market as providing more liquidity support to the long-term bond market, pushing risk assets to rise broadly.

As a result of the news, the yield on U.S. 30-year Treasury bonds quickly fell, decreasing about 9 basis points from its nearly 20-year high to 5.19%. The U.S. Treasury stated that the expansion of the repurchase scale aims to meet the persistent investor demand in the long-term national debt market and enhance market liquidity.

However, analysts pointed out that this repurchase does not reduce U.S. debt but rather adjusts the maturity structure of the national debt. As the U.S. government debt approaches $40 trillion, the market remains focused on fiscal pressure and the risks of rising interest expenditures.

Bitfinex stated that although Bitcoin has rebounded recently, the upside potential is still limited by insufficient liquidity in stablecoins. Data shows that since May, the supply of stablecoins on exchanges has decreased by about $14 billion. Additionally, on-chain data indicates that the stablecoin supply ratio (SSR), which measures the relationship between Bitcoin's market value and the total market value of stablecoins, has been rising recently, from 9.82 on June 30 to 11.69, indicating that the market liquidity environment remains tight.

Analysts believe that the improved expectations for U.S. fiscal liquidity may provide short-term support for Bitcoin and risk assets, but the lack of significant inflows of stablecoin funds means that further increases will still require more capital confirmation.