Bits + Bips: How Bessent’s Treasury Buyback Is Fueling Bitcoin’s Rally

**SPEAKER_1** (0:00)
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**Austin Campbell** (0:21)
Let's start with some framing, and then I wanna talk markets, guys. So the tape last week turned pretty hard. Bitcoin topped 75K and kept running over the weekend and into today. As we said, the ETF flows flipped, and the catalyst appears to have been the Treasury. They started doing long-end buybacks, talking 30-year sector with maybe some in the 10-20 year. They were looking at 2 billion, up to 4 billion, maybe more as of today, and 30-year yields ran up.
4 billion is limited relief in a 32 trillion market, but there are some people who are saying this is positive. So Arthur Hayes, on Laura's Unchained interview, said, I think this is the beginning of a major move on Treasury buyback change. Warsh and Bessent are quote, running the Powell and Yellen playbook, keep the short end cheap so the Treasury can issue short and buy back long, a sort of operation twist. Quote, they are going to start printing money and the buy back is meant to scare the market into believing 5% on the long bond is the level we'll defend it at.
ETH cleared 3,000 on that, but other analysts have stressed the buy back is not QE. The Fed did not turn on the printer and that the bond market moved first and it was a short squeeze that did the rest. So I want to start before we get into some of the other commentaries since we have a few people here know a little bit about these markets. And Gordon, I'll go to you first. When you're looking at what Bessent is doing and what it's doing to perceptions and volatility in the market, what are you seeing here?

**Gordon Grant** (2:07)
I feel like Bitcoin was kind of the last with large cap liquid assets, ex-crypto, to pick up on the volatility bug that's been percolating, permeating, pervading the macrospace for the last several months. We had chips and GPUs and data center players and large cap fintech and then the energy markets earlier in the year and rates themselves. And I think what Bessent has done from my perspective, sitting here and trying to run a number of significantly sized Bitcoin and crypto volatility books, is make a connection between TradFi rates volatility and now crypto volatility in a way that is meaningful to institutional participants and that a narrative can be built around. And I think the market reaction is really saying not much more than that, which is to say, as you pointed out, Austin, volumes are not so significant from this perhaps redux of operation twist in the context of the size of the market, but signals can be as effective as sizes.
I think we saw this a little bit with the way micro strategies on policy articulation played out earlier in the year when signaling wasn't effective, it took some size to finally get things moving. Here, it's a bit of the opposite. And the expectations around what it could mean, if there's a steep yield curve and exactly the type of behavior that you meant, people here think, see, and project in terms of price and their participation burr, even if the liquidity is not yet hitting the system. And probably from a delta or second order perspective, it matters more because most folks who are watching might have started to sense palpably that the tide was going out on liquidity, and this matters, right, in some substantive way.

**Austin Campbell** (3:59)
Ram, I want to flip over to you as somebody who's been following markets for a while here. What are you making of the price action over the last week?

**Ram Ahluwalia** (4:07)
Well, it's extraordinary. There's a lot happening. Number one is after Bessent had the intervention into the yen market, that's that commodities are racing again. And if we go to the spy versus gold chart, for example, you know, commodities are just outrunning. So that's called the debasement trade. And then you had Trump's comments around crypto, which has sparked an incredible short squeeze in Bitcoin. And you have the Treasury Secretary talking about hyperliquid. It's like we're in a parallel universe. I mean, it's as strategic apparently as like Taiwan Semiconductor. Still continuing to think like that is the asset of this cycle. It's got all sorts of interesting, you know, properties around it. We talked about this a few months ago, the circle and Coinbase deal with them.