When the short end rises instead of falling, why have crypto assets become the optimal solution?
Last night, the U.S. Treasury announced that it may use nearly $1 trillion from the TGA account to buy long-term U.S. Treasuries.
The 10-year U.S. Treasury yield fell in response, briefly dropping below 4.7%. Gold climbed above $4,670. Bitcoin touched $80,000 again for the first time in 101 days.
Everything looked beautiful.
But did you notice the strangest part this time?
Short-term yields rose instead of falling.
The 2-year U.S. Treasury yield briefly fell to 4.2188%, but unbelievably rebounded to 4.238% by the close.
This makes no sense at all under the traditional logic of “Operation Twist.”
Normally, the Treasury buys long-term bonds and sells short-term bonds—the long-end yield falls and the short-end yield rises. This is called “twisting the curve.”
But the logic behind this TGA buyback is to directly use cash to buy long-term bonds, without needing to increase short-term bond supply at the same time.
Long-term Treasuries rose (yields fell) because someone was stepping in to buy.
Short-term Treasuries fell (yields rose) because the market suddenly realized that once the TGA funds are spent, short-term liquidity will be drained.
Bloomberg macro strategist Simon White hit the nail on the head: This operation is no longer strictly “Operation Twist,” but is closer to a “net liquidity injection.”
In plain English: The Treasury is adding liquidity at the long end while draining it at the short end.
Expectations for short-term liquidity within the banking system are deteriorating.
Traders are telling Bessent: “The problem is no longer whether you have money, but whether we believe you.”
The 10-year U.S. Treasury yield briefly fell below 4.70%, reaching 4.68%, before quickly bouncing back above 4.70%.
Bessent has put the gun on the table, but the traders have not yet left the poker table.
Now, let’s look at how the various assets performed—
Stocks: The S&P 500 fell 0.28%, the Nasdaq fell 0.76%, and Nvidia posted its seventh consecutive decline. Tightening at the short end directly suppressed risk appetite.
Bonds: Fighting internally. The long end fell while the short end rose—the market itself is tearing apart.
Gold: Climbed above $4,670. No counterparty risk, and no fear of a short-end liquidity squeeze.
Bitcoin: Rose nearly 30% in 8 days, breaking above $80,000.
Ethereum: Climbed above $2,500, with a weekly gain of over 31%
See it?
Gold and Bitcoin have become the greatest common denominators amid this chaos.
Why?
Because they have no counterparty risk—they are not vulnerable to a chain reaction of blowups caused by the drying up of interbank liquidity;
And they also directly benefit from expectations of monetary easing brought about by falling long-term yields.
This is not a coincidence.
Global macro hedge funds have discovered this structural loophole and are collectively pouring into Bitcoin as the preferred vehicle for a “QE-like trade.”
A 30% weekly gain is not an oversold rebound.
This is a structural repricing.
Traditional assets are fighting—short-term and long-term assets are fighting, stocks and bonds are fighting, and the market and the Treasury are fighting.
Bitcoin, meanwhile, has jumped straight out of this battlefield.
It stands with neither the short end nor the long end. It is the biggest beneficiary of this internal contradiction.
The key date ahead is September 9, when the first buyback operation will take place.
If short-term liquidity is further drained at that point while the long end continues to fall—
Then the decoupling between BTC and the Nasdaq will be officially established.
The independent macro bull market in crypto will officially begin.
But conversely—if the scale of the buyback operation falls short of expectations, or if the funds actually drawn from the TGA are far below the “nearly $1 trillion” imagined by the market (realistic estimates may be only $100-200 billion)—
Then this 30% rally could simply be a liquidity illusion.
The answer will be revealed on September 9.
If the actual operation on September 9 falls short of expectations, the market will reverse instantly.
A senior Treasury official said that “there are nearly three weeks of preparation time before the first operation.” These three weeks will be the window for the bulls and bears to battle.
There may be volatility in the short term, but the direction is already clear—
When structural cracks appear in the pricing logic of traditional markets, assets without counterparty risk are the ultimate safe haven.
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