US bond buybacks ignite risk rally as Bitcoin spikes and Wall Street climbs

A surprise decision by the US Treasury to double the size of its long‑dated bond buyback program sent a powerful shockwave through global markets on 20 August, easing pressure on yields and unleashing a broad bid for risk assets. Bond buybacks – where the Treasury repurchases outstanding government bonds – helped pull long‑term yields lower, a backdrop that typically supports equities and crypto, and quickly improved market sentiment across asset classes.

In digital assets, Bitcoin briefly surged into the high‑$69,000s, gaining more than 7% in 24 hours, while Ethereum and Solana posted double‑digit jumps. The rally was amplified by a wave of forced liquidations in highly leveraged short positions, with on‑chain and derivatives data suggesting around $1–1.4 billion worth of shorts were wiped out in just a few hours.

US equities also joined the upswing, with the Dow Jones Industrial Average and S&P 500 closing modestly higher as investors interpreted the buyback move as a near‑term easing of financial conditions. Still, strategists warn that the same policy shift could keep commodity prices, including oil, uncomfortably firm, complicating the inflation outlook. The episode underscores how sensitive today’s markets are to policy signals – and how quickly volatility can return once macro assumptions are questioned.