Bitcoin briefly touched $70,000 — and the reason came from the bond market

Bitcoin briefly touched $70,000 on Wednesday for the first time since June 2, up more than 7% in 24 hours, and Ethereum climbed back above $2,000 for the first time since June. The trigger was not a crypto announcement. It was a US Treasury Department notice about buying back government bonds.

On Aug. 19 the Treasury said it will at least double the maximum size of its liquidity-support operations for 10- to 20-year and 20- to 30-year securities, from $2 billion to at least $4 billion per operation, running from Sept. 9 through Nov. 4. Long-term borrowing costs fell on the news: the 30-year Treasury yield dropped to about 5.19% from Tuesday's peak of 5.34%, its highest since 2007, and the 10-year fell to 4.647%.

The link between the bond market and crypto runs through the cost of money. When long-term government yields rise, safe government debt pays more, capital gets more expensive, and assets whose value sits far in the future have to compete with that. When yields fall, the pressure eases. Wednesday removed a source of pressure rather than adding a new reason to own crypto, which is why the day is better understood as a macro event than a crypto one.

Leverage did the rest. Traders positioned for further declines were caught by the jump, and exchanges force-closed their positions. CoinGlass data showed more than $1 billion in positions liquidated within a single hour, most of it short bets, with Bitcoin and Ethereum accounting for the bulk of it; across the full day more than 110,000 traders were liquidated. Each forced close is itself a buy order, which pushes the price up and trips the next layer of positions. Traders call that feedback loop a short squeeze, and it works exactly the same way in reverse.

Several things temper the picture. The buybacks are not quantitative easing: Federal Reserve asset purchases create reserves and expand the central bank's balance sheet, while Treasury buybacks are meant to improve liquidity in bonds that already exist. “This is NOT a debt paydown, it is just a rearrangement of the maturity schedule of Treasuries,” said Peter Boockvar of One Point BFG Wealth Partners. Minutes from the Fed's July meeting, released the same day, showed most officials favored holding rates steady while several wanted a hike, and many thought tighter policy could be needed if inflation failed to fall. Exchange Bitfinex noted that stablecoin supply on exchanges has fallen by $14 billion since May, arguing that until it turns, the rally stays unfunded. Bitcoin also remains well below its record above $126,000 set in October 2025.

For a beginner, the useful part is not the number on the screen. It is that a single day's move can come from bond-market plumbing with nothing to do with blockchains, and that borrowed money amplifies whatever direction the market picks. Anyone reading a green day as proof of a forecast should remember that the same mechanics produced the drops earlier this summer. This is information, not advice.