Bessent’s escalating bond-market response is feeding demand for scarce assets after the first buyback announcement failed to hold yields down.
itcoin price has crossed $80,000 as the US Treasury explored tapping its roughly $1 trillion cash pile to fund an escalating effort to stabilize long-term government debt.
Two senior Treasury officials told CNBC that the Treasury General Account, the federal government's operating account at the Federal Reserve, could help finance expanded bond buybacks. The officials did not specify how much could be used or when. Reuters put the account at about $940 billion as of last Wednesday.
On Aug. 19, the department unexpectedly said it would at least double liquidity-support buybacks for 10- to 30-year securities to $4 billion per operation from $2 billion, effective Sept. 9 through Nov. 4.
The 30-year Treasury yield had climbed as high as 5.337%, its highest since 2007, before falling to about 5.18% after the buyback expansion was announced. By the end of last week, longer-dated yields had largely retraced the decline. The 30-year yield remained around 5.24% on Monday, while the 10-year traded near 4.70%.
Treasury has yet to conduct any of the enlarged purchases, meaning the reversal reflected skepticism over the announcement rather than the failure of completed buybacks. The larger operations begin in September.
He described the operations as an attempt to improve liquidity in parts of the Treasury market strained by thin summer trading and heavy corporate issuance, including borrowing to finance artificial intelligence infrastructure.
The mid-quarter change itself was unusual. Treasury typically uses its quarterly refunding process to communicate changes to debt management, giving investors a predictable schedule. The Aug. 19 announcement came weeks after the latest refunding plans had already been set.
The intervention comes as the underlying financing burden continues to grow. US national debt crossed $40 trillion last week, including about $32.3 trillion held by the public, while higher yields are rapidly increasing federal interest costs.
The private sector is also competing for the same pool of capital. US technology companies have issued about $220 billion of debt this year to finance AI infrastructure, up sharply from 2025, adding another source of supply in a market already absorbing enormous government borrowing.
Cole pointed to the BTC/gold ratio as an early signal during the previous cycle. Bitcoin peaked against gold in December 2024, about 10 months before its dollar-denominated peak in October 2025. The sequence reversed this year, with Bitcoin bottoming against gold in February before reaching its dollar low in July.
He argues that a weaker dollar, continued currency debasement and growing competition for scarce assets in an AI-driven economy could create a stronger backdrop for Bitcoin over the next 12 to 18 months.
Bitwise Europe research head André Dragosch said the firm's crypto sentiment index briefly reached its highest level since late 2024 as funding rates, short liquidations and investor optimism surged. He said a pullback or consolidation now appears likely, although the broader recovery could remain intact.
Bessent has more tools available to support long-dated bonds, including larger buybacks, changes to the maturity mix of government borrowing, and potentially hundreds of billions of dollars sitting in the TGA.
The bond market is still confronting $40 trillion of federal debt, persistent deficits, inflation risk, and record demand for private capital.
For Bitcoin investors, every escalation adds another test of whether those forces can be managed without further weakening confidence in dollars and long-term government debt.