Bitcoin staged a sharp recovery on Wednesday, August 19, rising more than 6% and briefly reaching around $69,700 after the US Treasury announced that it would increase the size of its long-term bond buyback operations.
The move triggered a broader rally across cryptocurrency and precious metals markets, with Ethereum, Solana, XRP and gold also recording notable gains.
US Treasury Doubles Long-Term Bond Buybacks
The US Treasury said it would increase its liquidity-assistance buyback operations involving longer-dated nominal coupon securities.
Under the new plan, the Treasury will raise the amount involved in each transaction from $2 billion to at least $4 billion. The expanded operations are scheduled to run from September 9 through November 4, 2026.
The announcement was closely watched by financial markets because Treasury buybacks can influence liquidity and demand in the government bond market.
Investors quickly responded, with gains spreading beyond cryptocurrencies into other risk-sensitive and alternative assets.
Bitcoin Leads Cryptocurrency Rally
Bitcoin was the biggest beneficiary among major cryptocurrencies, briefly climbing above $69,000 and reaching approximately $69,700.
The cryptocurrency also moved above its 200-day simple moving average, which was cited at around $69,031. This level is closely followed by traders because it is often used as an indicator of a market’s longer-term direction.
A sustained move above the 200-day average could strengthen expectations of a broader recovery, although a temporary move above the level does not by itself confirm that a new bull market has begun.
Other major cryptocurrencies also advanced.
Ethereum gained about 8.8%, trading near $2,084, while Solana rose approximately 7% to $81.51. XRP also climbed more than 6%, reaching around $1.06.
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Gold Also Rises as Dollar Weakens
The rally was not limited to digital assets.
Gold rose about 3.5% to $4,487 an ounce, its highest level since June, while the US dollar index declined by approximately 0.8%.
The simultaneous gains in gold and cryptocurrencies suggested that investors were responding broadly to changing expectations around liquidity, monetary conditions and financial markets.
However, different assets can respond to Treasury and Federal Reserve policy expectations for different reasons, meaning the rally does not necessarily indicate identical investor sentiment across all markets.
Peter Schiff Warns of Higher Inflation
Economist and longtime gold advocate Peter Schiff criticized the Treasury’s decision on social media.
Schiff argued that the Treasury was stepping in to purchase longer-term government bonds that private investors were no longer willing to buy at the same pace. He warned that such actions could ultimately contribute to higher inflation.
His comments reflect a broader debate among investors about the relationship between government debt purchases, market liquidity and inflation.
The impact on inflation, however, depends on several factors, including broader fiscal policy, monetary policy, economic growth and financial conditions.
More Than $1.3 Billion in Crypto Positions Liquidated
The sharp price move also caused significant losses for leveraged cryptocurrency traders.
More than $1.3 billion in crypto derivatives positions were liquidated, with short sellers particularly affected as Bitcoin and other digital assets moved higher.
Short positions are bets that an asset’s price will decline. When prices rise sharply instead, traders who have borrowed funds or used leverage can be forced to close their positions, potentially accelerating the upward move.
The latest rally therefore provided a major boost to Bitcoin and other cryptocurrencies, but the large-scale liquidations also highlighted the risks associated with highly leveraged crypto trading.
For now, Bitcoin’s ability to remain above the closely watched $69,000 area could be important for determining whether the latest jump develops into a sustained recovery or proves to be another short-term market rally.
