Bitcoin tops $80,000 as Treasury weighs $950 billion cash for bond buybacks

The Treasury explored using the Treasury General Account to finance expanded bond buybacks as Bitcoin moved above $80,000. The Treasury General Account is the federal government's operating account at the Federal Reserve. Two senior Treasury officials told CNBC that the account could help finance the purchases. The officials did not specify how much cash could be used or when. Reuters valued the account at about $940 billion as of last Wednesday. CNBC later reported a balance of roughly $950 billion. The Treasury said on Aug. 19 that it would at least double buybacks supporting liquidity for 10- to 30-year securities. The operations will rise to $4 billion from $2 billion each. The larger operations will begin Sept. 9 and continue through Nov. 4. The 30-year Treasury yield reached 5.337%, its highest level since 2007. The yield later fell to about 5.18% after the buyback announcement. It remained around 5.24% on Monday. The 10-year yield traded near 4.70% on Monday. The Treasury has not conducted any of the enlarged purchases. Treasury Secretary Scott Bessent said purchases could rise above $4 billion. Bessent said the operations aim to improve liquidity in parts of the Treasury market affected by thin summer trading and heavy corporate issuance. The Treasury will continue regularly scheduled auctions, including sales of longer-dated debt. The Treasury could consider further changes at the next quarterly refunding. US national debt crossed $40 trillion last week. About $32.3 trillion of that debt is held by the public. US technology companies have issued about $220 billion of debt this year to finance artificial intelligence infrastructure. Directly using the Treasury General Account could initially avoid additional short-term Treasury issuance to fund the purchases. The account is above the Biden administration's target of about $550 billion to $600 billion. The account pays federal salaries, contractors, interest, and other government obligations. Treasury would eventually need to replenish any large drawdown through tax receipts or additional borrowing. The Treasury cannot create reserves like the Federal Reserve. The $950 billion balance does not represent an announced $950 billion bond-buying program. Treasury officials have not indicated that they would deploy anything close to the full balance. Robin Brooks of the Brookings Institution said using the account could reinforce expectations of artificial yield caps. Brooks said that expectation could pressure the dollar and support precious metals. The Federal Reserve has not joined the Treasury's intervention. Bitcoin gained more than 4% during the last 24 hours. Bitcoin's August gain puts it on course for its strongest August since 2017. Gold has also rallied as investors revived the debasement trade. Strive CEO Matt Cole said Bitcoin's gains against gold strengthen the bullish case for the cryptocurrency. Cole cited the BTC/gold ratio as an early signal in the previous cycle. Bitwise Europe research head Andre Dragosch said the firm's crypto sentiment index briefly reached its highest level since late 2024. Dragosch said a pullback or consolidation now appears likely, although the broader recovery could remain intact. The Treasury has additional options that include larger buybacks and changes to the maturity mix of government borrowing.