Madness in the crypto market: Bitcoin jumped by $4,000 in 20 minutes
What caused Bitcoin to break the $69,000 mark almost instantly, and what move by the US Treasury Department reignited the appetite for risk assets?
The price of Bitcoin jumped in a short time by about $4,000 and crossed the $69,000 mark, after the currency had previously traded in the $64,000–$65,000 range. This is one of the sharpest increases for Bitcoin in recent times, and it occurred in parallel with a significant move by the US Treasury Department in the bond market.
The main trigger was the US Treasury Department's announcement that it intends to significantly increase the volume of buybacks of long-term government bonds. Starting in September, the volume of activity is expected to rise from at least $2 billion to $4 billion per operation. The move was perceived as an attempt to increase demand for long-term bonds and stabilize the market. Following the announcement, the yield on 30-year US bonds fell by almost 10 basis points, to about 5.19%.
Why does this affect Bitcoin? When bond yields fall, some investors may see other assets, such as stocks and Bitcoin, as a more attractive option for yield. At the same time, the sharp rise in Bitcoin activated another mechanism: traders who bet on a price drop were forced to close their positions when the currency began to climb, which added demand and contributed to accelerating the rise.
According to market data published on Wednesday, more than $1 billion in crypto short positions were liquidated during the move. Therefore, the jump is not necessarily the result of a single factor, but a combination of falling yields, improved risk appetite, and the forced closing of bets against Bitcoin.
For investors in Israel, the event illustrates how much Bitcoin is influenced today not only by news from the crypto world, but also by decisions made by our allies and by changes in the bond and interest rate markets. The rapid rise does not guarantee a continued trend, and markets are still dealing with inflation, high US debt, and uncertainty regarding interest rate policy. The question now is whether Bitcoin is on the way to a sustained breakout or if today's sharp jump was mainly a short-term reaction to the move in the bond market?
