Bitcoin surged after the U.S. stock market opened on Wednesday, briefly touching $69,749, its highest level since June 2, as traders reacted to improving liquidity expectations tied to U.S. Treasury operations. According to Cointelegraph, the cryptocurrency was up about 6% on the day at its peak.
U.S. Treasury expands long-term bond buybacks
The U.S. Treasury said it will expand the size of its long-term Treasury buyback operations starting Sept. 9. The cap for each operation will rise from $2 billion to at least $4 billion.
Markets viewed the move as additional liquidity support for the long-dated bond market, which helped lift risk assets more broadly. Following the announcement, the yield on the 30-year U.S. Treasury fell quickly, dropping about 9 basis points to 5.19% from levels that had been near a 20-year high.
The Treasury said the increase in buyback size is meant to meet persistent investor demand in the long-term Treasury market and improve market liquidity.
Bitfinex points to weak stablecoin liquidity
Bitfinex said that while Bitcoin has rebounded in recent sessions, the scope for more upside remains constrained by insufficient stablecoin liquidity. Data cited in the report showed that stablecoin supply on exchanges has declined by about $14 billion since May.
Bitfinex said, 「Until stablecoin supply recovers, the current rally lacks funding support.」 In crypto markets, stablecoins are often treated as dry powder, and changes in their balances are watched as a signal of how much sidelined capital may still enter the market.
SSR rise signals tighter conditions
On-chain data also showed the stablecoin supply ratio, or SSR, continuing to rise. The metric, which measures the relationship between Bitcoin’s market capitalization and the total market capitalization of stablecoins, increased from 9.82 on June 30 to 11.69 recently.
That suggests liquidity conditions in crypto remain tight even as expectations around U.S. fiscal liquidity have improved. The report said those improving expectations may offer short-term support for Bitcoin and other risk assets, but the lack of a clear return in stablecoin capital means any follow-through in the rally still needs stronger funding confirmation.