Bitcoin faces rates test as BOE commits to unwind £368 billion

The Bank of England has committed to remove £368 billion of gilts held for monetary-policy purposes by September 2034. The amount covers the portfolio remaining after the Bank separated £120 billion of longer-dated gilts to back banknotes. The Monetary Policy Committee said the remaining stock will decline through bond maturities and £20 billion of annual active sales, producing an average total runoff of £46 billion a year. Quantitative tightening shifts bonds from a central bank's balance sheet toward private investors and can raise the additional yield demanded on longer-dated debt, tightening financial conditions even when the policy rate is unchanged. The Bank Rate and balance-sheet decisions were separate votes. Six MPC members supported keeping Bank Rate at 3.75%, while Megan Greene, Catherine Mann and Huw Pill preferred an increase to 4%. All nine members supported the multi-year gilt unwind. Implementation will begin with fewer active sales to the market. The Bank's market notice said APF auctions will pause while it reviews a possible arrangement involving HM Treasury and the Debt Management Office. Operational details are due by April 2027, and the sales-to-Government model remains subject to a final decision. Gilts will continue to mature. The planned active-sales pace is close to recent practice. The Bank sold £21 billion over the previous 12 months, compared with £20 billion a year under the new plan. Average total runoff, including maturities, will fall to £46 billion from the previous year's £70 billion reduction. Reuters reported that the 10-year gilt yield fell more than 7 basis points and the 30-year yield fell nearly 10 basis points by early Thursday afternoon. The Bank's yield-curve data provide the broader rates backdrop, but one trading session cannot establish how much each policy detail contributed. The BOE's July assessment estimated that quantitative tightening accounted for 20 to 30 basis points of an approximately 200-basis-point rise in long-term gilt term premia since 2022. It attributed most of the increase to global uncertainty, heavy sovereign issuance and structural changes in UK demand. Bitcoin's connection runs through the broader rates and risk-appetite channel. IMF research found that US monetary tightening can depress a common crypto-market factor, but that finding concerns US shocks and is only a limited analogy for the BOE plan. Earlier CryptoSlate analysis described opposing pressures from tighter liquidity and demand for assets outside sovereign finance. Bitcoin traded near $78,000 on CryptoSlate on Friday, while Coinbase showed a similar level. Both figures were rolling snapshots and cannot isolate a reaction to Thursday's announcement. The decision therefore sets up a longer-term test of whether predictable central-bank withdrawal can put enough pressure on global yields and risk appetite to affect Bitcoin, even though the auction pause and falling gilt yields made the first response comparatively mild.