Bitcoin’s rebound toward $80,000 has as much to do with the U.S. bond market as it does with crypto itself, according to Gordon Grant, head of derivatives at Bitwise.
Speaking on Monday’s episode of Bits + Bips, Grant said the Treasury Department’s move to expand buybacks of long-dated debt worked chiefly as a signal. In his view, the same volatility that has been unsettling long-dated Treasurys is also pushing Bitcoin higher.
A stressed Treasury backdrop
Grant framed the move against a strained bond market. The 30-year Treasury yield had climbed to a 19-year high above 5.3% before the Treasury said on Aug. 19 that it would double its long-end buybacks to at least $4 billion per operation beginning Sept. 9.
Bitcoin, after falling about 37% from its October record near $124,820, recovered to roughly $79,000. Over the same week, spot Bitcoin ETFs took in about $1.9 billion.
Why Grant says volatility is lifting Bitcoin
On the show, Grant said Bitcoin was the last of the large-cap liquid assets, outside crypto, to catch the volatility bug spreading across macro markets. He also noted that the buyback program was small relative to the roughly $32 trillion Treasury market, but argued that signals can matter as much as size.
Grant described the long end of the Treasury market as one where excess variance had triggered a buyer strike, leaving the market unsteady. He said that kind of instability has the opposite effect in crypto.
As Grant put it on the program, 「High vol in Bitcoin gets people excited about it because it starts to inflate the right tail of distribution. In rates, it kind of works the other way.」
His argument was that the same forces hurting stability in the Treasury market are feeding fresh momentum into Bitcoin.
A different view on the panel
Not everyone agreed that the intervention was necessary. Ram Ahluwalia, CEO of Lumida, said on the podcast that the Treasury may have made matters worse.
He said, 「I don’t think Bessent even needed to intervene. Markets were settling of their own accord. His intervention might have actually spooked investors.」
Any relief was short-lived. Long-dated yields rebounded within a day.
Bessent leaves room for larger operations
Treasury Secretary Scott Bessent, who the report said was tapped to run Treasury in part because of his pro-crypto stance, has since said the buyback operations could exceed $4 billion each. That leaves open how far the government is willing to go in supporting the long end of the market.