Bitcoin (BTC) Bull Run Confirmed as Treasury Expands Bond Buyback Program, Says Arthur Hayes

TLDR

• BitMEX co-founder Arthur Hayes confirmed a Bitcoin bull market is in motion, attributing it to expanded U.S. Treasury bond buyback operations
• Treasury increased long-dated bond buyback limits from $2 billion to a minimum of $4 billion per operation, effective September 9
• Bitcoin surged from under $65,000 to over $80,000 in the days after Treasury Secretary Bessent’s August 19 announcement
• Spot Bitcoin ETFs in the United States saw $517 million in net inflows on August 19, marking the best performance since early May
• Hayes confirmed Maelstrom adopted maximum risk positioning across Bitcoin, Ether, Ethena, and Ether.fi holdings

Arthur Hayes, co-founder of BitMEX, has proclaimed the start of a fresh Bitcoin bull market, attributing the momentum to the U.S. Treasury’s decision to significantly expand its bond buyback operations, which he believes will inject new dollar liquidity into markets.

In an essay titled “Same Same But Different” released on August 25, Hayes laid out his thesis connecting Bitcoin’s recent surge to Treasury Secretary Scott Bessent’s strategy of ramping up purchases of longer-maturity government bonds.

Buyback Program Gets Major Boost

On August 19, the U.S. Treasury Department announced it would increase the maximum size of specific long-dated bond buyback operations by at least 100%. The new ceiling jumps from $2 billion to no less than $4 billion for each transaction, with the expanded program scheduled to run from September 9 through November 4.

According to Treasury officials, the initiative aims to enhance market liquidity for older government securities and optimize cash management. The department has not characterized the program as a form of monetary easing.

Hayes interprets the move through a different lens. He contends that purchasing older, longer-maturity bonds drives their prices higher while compressing yields. In his analysis, reduced yields enhance the appeal of risk-oriented assets such as Bitcoin.

He compared the strategy to former Treasury Secretary Janet Yellen’s approach in late 2023, when increased Treasury bill issuance allegedly redirected money-market funds toward tradable securities.

Bitcoin Breaks Through $80,000 Barrier

Bitcoin rallied from levels below $65,000 prior to the Treasury announcement to exceed $80,000 by August 25. The digital asset touched an intraday peak above $81,000, representing its most substantial weekly gain in recent months.

Multiple catalysts drove the upward movement. U.S.-listed spot Bitcoin exchange-traded funds attracted approximately $517 million in net inflows on August 19 alone. Forced liquidations in derivatives markets accelerated the breakout above $71,000. A softening U.S. dollar index provided additional tailwinds.

The 10-year Treasury yield dropped toward 4.65% following the buyback announcement, while the 30-year yield approached 5.20%. Both benchmarks subsequently retraced a portion of those moves.

At the time Hayes published his analysis, no buyback operations under the expanded limits had been executed. The enhanced schedule commences on September 9.

Treasury Cash Reserves and Maximum Risk Allocation

Hayes also highlighted the Treasury General Account, which contains approximately $940 billion in cash reserves. Bessent has suggested that portions of these funds could finance buyback operations without altering planned debt issuance schedules. No official blueprint for deploying the entire balance has been revealed.

Hayes disclosed that his investment firm Maelstrom has shifted to maximum risk allocation, maintaining exposure to Bitcoin, Ether, Ethena, and Ether.fi. Specific position sizes were not revealed.

He acknowledged that sharp pullbacks can still occur during bull markets.

The Federal Reserve Bank of New York is conducting separate reserve-management purchases totaling approximately $10 billion this month. The Fed maintains these transactions serve to preserve adequate banking system reserves and operate independently from Treasury’s buyback initiative.

The critical date ahead is September 9, when the expanded buyback caps become operational. Treasury officials plan to review purchase volumes during the next quarterly refunding process on November 4.

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