Bitcoin and Ethereum extended their sharp recovery on Friday as markets continued to digest the U.S. Treasury’s decision to expand buybacks of longer-dated government bonds. Bitcoin opened at $73,013, up 5.4% from Thursday’s opening price, before climbing to $77,307.95 by 9:08 a.m. ET, while Ethereum opened at $2,326.60 and advanced to $2,390.81. The move reflects a broader shift in expectations around liquidity and financial conditions rather than a crypto-specific catalyst alone.
Treasury Buybacks Change the Market’s Liquidity Narrative
The immediate catalyst was the Treasury’s decision to at least double the maximum size of certain long-dated bond buybacks from $2 billion to at least $4 billion per operation. The program covers the 10-to-20-year and 20-to-30-year sectors and is scheduled to take effect on September 9, running through November 4. Treasury said the larger operations are intended to provide greater liquidity support to longer-dated securities where it has been receiving substantial demand from market participants.
Crypto markets interpreted the announcement as a more supportive liquidity signal. That does not make the program equivalent to Federal Reserve quantitative easing, but the prospect of additional support for the long end of the Treasury market helped push yields lower and encouraged investors to reassess exposure to higher-beta assets. Bitcoin subsequently climbed about 23% over the five trading days from $62,836.88 to roughly $77,227, marking its strongest weekly performance in two years.
Bitcoin’s Move Is Being Amplified by Positioning
The speed of the rally also points to the role of derivatives positioning. The Treasury announcement triggered a sharp repricing across crypto, with estimates showing roughly $3.5 billion in crypto short positions caught in the subsequent squeeze. Earlier in the move, total crypto liquidations reached approximately $1.92 billion over 24 hours, according to CoinGlass data cited by The Block.
That dynamic matters because forced buying can temporarily accelerate a rally beyond what underlying spot demand alone would generate. Bitcoin’s advance toward $80,000 therefore represents both renewed demand and the unwinding of bearish positioning accumulated during its months-long decline. The sustainability test will be whether spot buyers continue supporting prices after the immediate pressure from short covering fades.
Ethereum Is Participating in the Broader Risk-On Rotation
Ethereum has also benefited from the change in market conditions. The cryptocurrency opened Friday at $2,326.60, 3.3% above Thursday’s opening level, and reached $2,390.81 by 9:08 a.m. ET. Its move follows an earlier surge that took ETH above $2,000 for the first time since May, while major altcoins including Solana and XRP also posted substantial gains.
The breadth of the move suggests that investors are not treating the Treasury announcement as a Bitcoin-only event. A reduction in perceived pressure from long-term yields can improve the relative appeal of assets with greater sensitivity to liquidity, while improving sentiment can encourage capital to move further down the crypto risk curve.
Macro Conditions Remain the Critical Test
Despite the rally, the underlying macro backdrop remains complicated. The Treasury intervention comes after the 30-year Treasury yield reached roughly 5.34%, its highest level in years, amid concerns surrounding inflation, government borrowing and the U.S. fiscal outlook. Reuters also reported renewed concerns that the buyback strategy could contribute to dollar weakness if investors interpret it as an attempt to suppress longer-term yields.
For crypto markets, that creates two competing forces. Easier perceived liquidity can support Bitcoin and Ethereum, while persistent fiscal concerns, elevated long-term yields or renewed inflation pressure could restore volatility. The market is therefore likely to remain highly sensitive to Treasury yields, the dollar, Federal Reserve expectations and ETF flows as the rally develops.
Looking ahead, the key question is whether Bitcoin can consolidate above the $70,000-$75,000 area after the initial liquidity-driven surge and whether Ethereum can maintain its recovery above $2,300. Continued spot demand would provide stronger evidence that the move is broadening beyond a derivatives-driven squeeze; conversely, a reversal in Treasury yields or a resurgence in dollar strength could quickly test the rally’s foundations. For sophisticated crypto investors, the next phase will be less about the headline Treasury announcement and more about whether the resulting improvement in market liquidity becomes durable.
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