The Treasury Buyback Tweak That Triggered a $4 Billion Bitcoin Short Squeeze

The Bitcoin move from $64,000 to above $79,000 across four trading sessions constitutes one of the most pronounced rallies for the asset in 2026. The immediate catalyst was the U.S. Treasury Department announcement on August 19, which doubled the limit for its long-term bond buyback operations from $2 billion to $4 billion per operation, effective from September 9 through November 4. The cryptocurrency market interpreted this measure as an expansionary signal, triggering the liquidation of approximately $4 billion in short positions and elevating Bitcoin’s price by 25%.

This article examines the transmission mechanisms that connected a Treasury liability management decision to a price movement of this magnitude and evaluates the sustainability of said movement against the underlying macroeconomic fundamentals.

The Mechanics of the Buyback: What Actually Occurred

The Treasury, under Secretary Scott Bessent, announced it would increase the size of its buybacks of longer-duration Treasury bonds. Bessent subsequently stated that the $4 billion constituted a “floor, not a ceiling”, suggesting the figure could increase further. The announcement occurred one day after the 30-year bond yield reached 5.34%, its highest level since 2007.

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