Bitcoin and gold experienced significant price increases following the U.S. Treasury Secretary Scott Bessent's decision to intervene in the bond market. The Treasury's move involved doubling long-dated bond buybacks from $2 billion to at least $4 billion per operation. This action led to a drop in long-dated U.S. yields and a 0.8% decline in the dollar's value.
The market interpreted Bessent's strategy as a signal that the Treasury is willing to lean against unwanted market movements and support asset price increases through a weaker dollar. Gold surged near $4,565–$4,585 per ounce, with some reports indicating a jump of almost $188, or 4.3%, to over $4,523, its best level in over two months. Bitcoin similarly saw strong gains, trading near $72,000–$73,000 and outperforming gold on the day with an increase of more than 5% to approximately $68,100.
Analysts noted that while the mechanical impact of the doubled buybacks might seem small relative to the $31 trillion Treasury market, the signal sent by Bessent's intervention was significant. Traders are pricing in the Treasury's willingness to create a "soft line in the sand" for yields. Robert Gottlieb, a metals trader, called the announcement "totally unexpected" and "very bullish for gold." Gerald Gan, chief investment officer at Reed Capital, indicated that "The dollar certainly is the biggest casualty," interpreting Bessent's actions as a deliberate effort to push down long-term real rates and tolerate a weaker dollar to support the economy.
Some market observers, like Peter Schiff, suggested that the Treasury is accepting higher inflation to manage long-term rates, which has benefited precious metals and Bitcoin. However, Schiff predicted Bitcoin would be a sell while gold and silver would extend gains. Despite the varied long-term outlooks, both gold bugs and Bitcoin bulls are currently reacting to the same Treasury signal, which points to continued support for alternative assets amid a declining dollar and lower yields. The move is seen by some as a turning point, with Washington taking a more active role in managing borrowing costs, potentially reducing the attractiveness of dollar-denominated debt and pushing investors towards alternatives like the yen, Swiss franc, and gold.
