How $739B in new US debt could absorb crypto’s liquidity before buybacks even reach Bitcoin
The US Treasury expects to borrow $739 billion from July through September while paying investors to hand back some of its older bonds. The pairing looks self-defeating because both transactions involve the same issuer. However, they are on separate ledgers and solve separate problems: auctions finance the government and create liquid benchmarks, while buybacks retire selected old issues or help Treasury manage its cash balance.
Treasury's Aug. 3 borrowing estimate assumes a $950 billion cash balance at the end of September, then projects another $628 billion of borrowing from October through December. Its August refunding statement authorized as much as $38 billion of liquidity-support purchases and $25 billion of short-dated cash-management purchases during the current quarter.
Treasury widened the program on Aug. 19, lifting the maximum size of each buyback in the 10-to-20-year and 20-to-30-year sectors from $2 billion to at least $4 billion for operations from Sept. 9 through Nov. 4.
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