US Treasury bond buybacks drive Bitcoin and crypto market rally

Bitcoin jumps over 23% after US Treasury announces bond buybacks

The price of Bitcoin (BTC) rose more than 23% this week, reaching nearly $79,000, after the US Treasury announced plans to double buybacks of long-dated bonds. This move has sparked discussions about whether such liquidity support—without officially calling it quantitative easing (QE)—could benefit Bitcoin and other crypto assets.

Ether (ETH), the second-largest cryptocurrency, also climbed above $2,400 following the announcement. The Treasury’s plan involves increasing buybacks for bonds with maturities of 10 to 30 years, which led to a drop in long-dated bond yields and a sharp rise in Bitcoin’s price.

Key details of the Treasury’s bond buyback program

• The US Treasury will double buybacks for 10- to 20-year and 20- to 30-year bonds.
• The program runs from September 9 to November 4.
• Bitcoin’s price surged over 6% immediately after the announcement, reaching nearly $69,000.
• Standard Chartered analyst Geoff Kendrick suggested Bitcoin could reach $100,000 by year-end if it holds above $65,500.

Why analysts say Bitcoin benefits from liquidity support

Analysts argue that Bitcoin tends to rise when governments introduce liquidity measures, such as bond buybacks. Unlike traditional currencies, Bitcoin has a fixed supply, which some believe makes it resistant to inflation caused by monetary policies.

Geoff Kendrick of Standard Chartered noted that Bitcoin’s key technical level is $65,500. If the price stays above this level, it could confirm that the recent low point in its price cycle has passed. However, if Bitcoin falls below this level, the outlook may change.

Metaplanet expands Bitcoin treasury strategy to the US

Japanese company Metaplanet is expanding its Bitcoin treasury strategy to the US by acquiring a controlling stake in Nasdaq-listed Super League Enterprise. The deal involves Metaplanet contributing 2,100 BTC (worth about $145 million) and $2.5 million in cash to Super League, which will be renamed Superplanet.

The 2,100 BTC represents less than 5% of Metaplanet’s total Bitcoin holdings of 43,000 BTC. The company stated that this move provides two avenues for raising capital: one in the US through Superplanet and another in Japan through Metaplanet. Shares of Super League rose over 50% following the announcement.

The deal is expected to close in the fourth quarter, pending shareholder approval and other customary conditions.

Cypherpunk Technologies invests $33 million in Zcash mining

Cypherpunk Technologies, a publicly traded company, has acquired a Zcash (ZEC) mining fleet from Winklevoss Capital in a $33.33 million equity deal. The acquisition gives Cypherpunk control of about 18% of Zcash’s network hashrate, a measure of computing power securing the network.

The mining operation is already active in US facilities, producing about 4.2 gigasolutions per second (GSol/s). Cypherpunk also holds 323,394 ZEC, roughly 1.9% of the circulating supply, and aims to increase its ownership to 5%.

The company claims Zcash mining offers better economics than Bitcoin mining or AI data center workloads, though profitability depends on factors like ZEC’s price, network hashrate, mining difficulty, and operating costs.

The Zcash network recently implemented the Ironwood upgrade on July 28 to replace a flawed pool that could have allowed counterfeit ZEC creation. No exploitation of the flaw was detected.

CFTC seeks public input on AI compute futures

The US Commodity Futures Trading Commission (CFTC) is requesting public comments on futures contracts tied to AI computing capacity. This step could shape a new market for trading and hedging the cost of computing power.

CME Group plans to launch two compute futures contracts on October 5, pending regulatory approval. The contracts will use benchmarks provided by Silicon Data. Estimates from financial firms suggest AI infrastructure spending could reach 2% to 2.5% of US GDP this year.

The CFTC’s review may affect the timeline for these products. Once the White House completes its review, the CFTC will open a public comment period, typically lasting 30 to 60 days.

What is confirmed about the market movements

• The US Treasury announced plans to double buybacks of long-dated bonds from September 9 to November 4.
• Bitcoin’s price rose over 23% this week, reaching nearly $79,000.
• Ether’s price crossed $2,400 following the Treasury’s announcement.
• Metaplanet is acquiring a controlling stake in Super League Enterprise to expand its Bitcoin treasury strategy to the US.
• Cypherpunk Technologies acquired a Zcash mining fleet, controlling 18% of the network’s hashrate.
• The CFTC is seeking public comments on AI compute futures contracts.

What remains uncertain

• Whether Bitcoin will hold above $65,500 to confirm the end of its recent price cycle low.
• The long-term impact of the Treasury’s bond buybacks on crypto markets.
• Whether Standard Chartered’s prediction of Bitcoin reaching $100,000 by year-end will materialize.
• The profitability of Zcash mining for Cypherpunk Technologies, which depends on multiple market factors.
• The timeline for regulatory approval of CME Group’s AI compute futures contracts.

Why these developments matter for crypto markets

The Treasury’s bond buyback program has shown how government liquidity measures can influence crypto prices. Bitcoin and other digital assets often react positively to such interventions, as they may increase market liquidity and reduce inflation concerns.

Metaplanet’s expansion into the US highlights growing corporate interest in holding Bitcoin as part of treasury strategies. This trend could encourage other companies to adopt similar approaches, increasing demand for Bitcoin.

Cypherpunk’s investment in Zcash mining demonstrates the growing competition in crypto mining, particularly for assets with strong privacy features. The success of such ventures depends on market conditions and network dynamics.

The CFTC’s review of AI compute futures reflects the evolving intersection of crypto, AI, and traditional financial markets. If approved, these contracts could create new opportunities for trading and hedging computing power costs.

Sources

• Cointelegraph