Bitcoin traded above $80,000 on Aug. 25 as BitMEX co-founder Arthur Hayes argued that expanded U.S. Treasury bond buybacks marked the beginning of a new bull market for the cryptocurrency.
Hayes Links Rally to Treasury Policy
Hayes presented his argument in an Aug. 25 essay titled Same Same But Different. He connected Bitcoin's recent rally to Treasury Secretary Scott Bessent's decision to increase purchases of longer-dated government securities. The Treasury confirmed on Aug. 19 that it would at least double the maximum size of certain long-end liquidity-support buybacks from $2 billion to at least $4 billion per operation between Sept. 9 and Nov. 4.
Hayes described the move as a mechanism for adding dollar liquidity and reducing pressure on long-term yields. Lower yields make risk assets comparatively more attractive and encourage capital to move toward Bitcoin, he argued. However, the Treasury says the program supports market liquidity rather than providing monetary stimulus.
Bitcoin's Rally in Context
Bitcoin rose from below $65,000 before the announcement to above $80,000 on Aug. 25, reaching an intraday high above $81,000. The timing supports Hayes's argument that expectations of easier financial conditions benefited Bitcoin, though it does not establish that the buyback announcement caused the entire rally. ETF inflows, short liquidations and a weaker dollar also contributed.
U.S. spot Bitcoin ETFs recorded about $517 million in net inflows on Aug. 19, their strongest daily intake since early May. The 10-year Treasury yield initially declined toward 4.65% after the announcement, while the 30-year yield moved closer to 5.20%. Yields subsequently recovered part of that decline.
Is This Really Quantitative Easing?
Hayes compared Bessent's approach with former Treasury Secretary Janet Yellen's increased reliance on Treasury bills in late 2023, which he believes helped move money-market balances into marketable securities. Treasury buybacks are debt-management operations and not equivalent to Federal Reserve quantitative easing.
The Treasury describes its buybacks as a way to improve liquidity in older securities and manage its cash position. Its Aug. 5 refunding statement authorized up to $38 billion of liquidity-support purchases during the quarter, alongside up to $25 billion of short-maturity cash-management buybacks. The New York Fed is separately conducting about $10 billion of reserve-management purchases, which the central bank says maintain ample reserves in the banking system.
TGA as a Potential Catalyst
Hayes identified the Treasury General Account, which held approximately $940 billion, as another possible source of buying power. Bessent said the Treasury could use some of that cash for bond buybacks without changing its scheduled long-term debt auctions. However, the government has not announced a plan to deploy the entire balance.
Treasury's latest borrowing estimate assumes a $950 billion cash balance at the end of September and $850 billion at year-end. It expects to borrow $739 billion in privately held net marketable debt during the July-to-September quarter. Hayes called a large TGA drawdown the middle road, but the scale and timing remain speculative.
Maximum Risk Exposure
Hayes said Maelstrom, his investment firm, had moved to maximum risk with major exposure to Bitcoin, Ether, Ethena and Ether.fi. He warned that a continued advance would not prevent steep corrections. The next confirmed policy milestone is Sept. 9, when the larger long-end buyback limits take effect. Treasury will reconsider future purchase sizes during its next quarterly refunding on Nov. 4.
