Source: BIT Securities

Previously, U.S. Treasury yields remained high, with the 30-year Treasury yield hitting its highest level since 2007. This unfavorable macro environment has placed significant pressure on U.S. stocks, especially as chip stocks, which had previously surged, displayed notable corrections.

However, yesterday, the U.S. Treasury finally took action.

1. The Treasury Steps In: The Buyback Limit Doubles Directly

The U.S. Treasury announced that between September 9 and November 4, the single transaction buyback limit for 10- to 30-year U.S. Treasury bonds will at least double—from $2 billion to $4 billion.

This action translates to: the Treasury will spend more money to buy back long-term Treasury bonds it previously issued that are nearing expiration. The buyback efforts will focus on two ultra-long maturity ranges: 10 to 20 years and 20 to 30 years.

As the news broke, the market reacted immediately: long-term Treasury yields quickly declined, with the 30-year Treasury yield falling by nearly 10 basis points at one point, while the U.S. stock market slightly rose, particularly as the entire cryptocurrency market experienced a long-awaited surge.

2. Why the Market is Responding: This is the Treasury Working for the Federal Reserve

The significance of this buyback lies not just in the amount, but in the identity behind it.

The market largely interprets this action as "the Treasury working for the Federal Reserve." The logic is as follows: the Federal Reserve would not easily print money to buy bonds directly, but long-term rates do need to be suppressed. Therefore, the Treasury steps in personally, injecting funds directly into the market through buybacks to push down long-end rates.

In terms of scale, the Treasury's buybacks are far from comparable to the Federal Reserve's quantitative easing. However, the signal it conveys is strong enough— the government is directly supporting the market. The stability of confidence is sometimes more valuable than the funds themselves.

3. The Anomalous Situation: Good News Hits, but the Stock Market Reacts Indifferently

However, a rather rare phenomenon occurred on the trading floor last night.

Normally, with such a significant positive development, one would expect the stock market to soar. Yet the actual performance was disappointing: the three main stock indices only rose slightly, and the sector differentiation was extremely evident. Previously hot sectors like storage and optical modules continued to retract, showing no reaction to this piece of good news, as if they hadn’t received the notice at all.

In contrast, a character almost forgotten by the market suddenly stole the spotlight—Bitcoin surged unexpectedly, climbing from around $64,000 to above $70,000.

4. Bitcoin's Unusual Movement is the Most Notable Signal from Last Night

Why did the Treasury protect the market but stocks did not respond, while Bitcoin soared?

The answer lies in Bitcoin’s longstanding role: it is the barometer of U.S. dollar liquidity. Stock pricing looks at earnings and narratives, while Bitcoin is most sensitive to whether "money in the market is loose or tight." The Treasury's buyback of bonds essentially supplements liquidity in the system—while stocks are still digesting their negative news, Bitcoin had already traded in the warmth of liquidity.

This also explains the previous market structure. Over the past near year, U.S. dollar liquidity has been tight, with existing funds in the market almost entirely absorbed by AI narratives, creating a situation of "AI soars, while others remain stagnant." Now the script has flipped: AI-related sectors are retracting, while Bitcoin suddenly takes off due to favorable liquidity.

This is actually a good thing for the entire market. The warming of liquidity will not remain limited to just one asset—the rising tide will ultimately benefit the entire U.S. stock market.

5. Final Thoughts

The Treasury's buyback operations suppress rates and stabilize confidence; but the true reveal of liquidity shifting is in Bitcoin's unexpected large upward movement.

The adjustments in the AI sector may not be over, but the underlying logic of the market is switching from "competing for existing funds" to "waiting for new funds." Once the flow of funds is reopened, the stage for the market sentiment may be much broader than it has been in over a month.

Disclaimer: This article is written by an external author and represents only the author's personal views, not the position, viewpoint or investment advice of BIT. The information, data, and opinions referenced herein are for reference only and do not constitute any form of investment, trading, financial or other professional advice. Digital assets and securities markets carry high risks, and market views and historical performance do not represent future results. Investors should independently assess their circumstances and assume relevant risks.

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