According to Woofun AI, the US Treasury implemented a $6 billion 20 to 30-year bond repurchase program on Tuesday, fully accepting all offers from traders, yet the BTC price did not rebound as in August; as of Thursday, BTC had further fallen below the $80,000 integer mark.
The core of this divergence in market reaction is that this repurchase is entirely within the established plan and lacks the attributes of policy changes that had previously caused surprise in the market. On August 19, the Ministry of Finance suddenly announced that it would double the size of such long-term bond repurchases and raise the minimum amount to $4 billion in a single round. This unexpected move directly drove BTC up about 7% on the same day and caused 30-year bond yields to fall from a 19-year high. In contrast, Tuesday's operation was just routine, and investors have long digested this expectation, so they have failed to replicate the previous liquidity premium effect.
Judging from the details of the transaction, Woofun AI compiled data showing that although some bond traders requested repurchase of up to $10.7 billion, the Ministry of Finance ultimately selected only 6 billion US dollars in total transactions. The payment price was between 52 cents and 71 cents per dollar, and the total expenditure was about 3.8 billion US dollars. This was the fourth full transaction since the expansion plan on August 19, but there were no significant price fluctuations in the subsequent market, and BTC fell 1.5% within 24 hours. Newsquawk pointed out that the purpose of such operations is to help traders handle old bonds with poor liquidity. The size is precisely calculated to avoid interfering with the yield curve, and is essentially a benefit for routine financial maintenance rather than risk assets.
Notably, long-term interest rates have not declined due to full repurchases. When the repurchase quota was filled on October 1, the 10-year yield hit 5.342%, a record high since April 2002; after the Federal Reserve's decision on Wednesday, the 10-year period closed at around 5.04%, still above 5%.
The combined effects of the macro environment have further weakened the potential benefits of repurchases. The Federal Reserve's two-day meeting coincided with Tuesday's buyback operation. The central bank kept interest rates unchanged in the 3.75% to 4% range with 10 votes in favor and 2 against on Wednesday. Two members advocated a 25 basis point rate hike, and the market's pricing for the December rate hike immediately rose to more than 90%. This means that what suppresses risky assets is not a “delay in interest rate cuts,” but “the next step may be to raise interest rates.” According to Chase's analysis, although the expanded repurchase program will continue until November 4, up to now, completed full repurchases have not significantly contributed to a decline in long-term bond yields. Unless the scale of repurchases is further expanded in the future, it is difficult for such routine operations to change the market pattern. The weakness in the BTC price is more a reflection of the solidification of macro-liquidity expectations than the result of a single bond operation.