- Treasury buybacks ease volatility and hint at future liquidity injections for markets.
- Bitcoin benefits from policy pivots as volatility triggers rapid fiscal response moves.
- Rising bond market stress leads to indirect stimulus, echoing bullish 2022 BTC setup.
The return of tariff-heavy policy under Trump has triggered a market reaction that felt like an avalanche. According to report by ARTHUR HAYES co-founder BitMEX his abrupt announcement of “Liberation Day” tariffs against major trading partners, especially China, sent global asset markets spiraling. However, buried within the chaos is a potent signal for crypto investors, particularly Bitcoin enthusiasts.
The administration’s rapid retreat from full-scale implementation and the Treasury’s response using buybacks reveal a pattern: financial volatility will not be allowed to run wild. For those paying attention, this means one thing future monetary injections are likely, and Bitcoin is the clearest winner.
Tariff Shock Sparks Policy Pivots
Trump’s tariff announcement was worse than analysts feared. Both the U.S. and China took hardline stances, leading to a surge in bond market volatility. The MOVE Index spiked to near-record levels, causing a selloff in global stocks and bonds.
Within days, Trump’s team eased back, pausing tariffs for most countries except China. This quick shift revealed a red line rising volatility in the bond market triggers immediate policy changes.
Additionally, the Federal Reserve signaled readiness to step in. Meanwhile, Treasury Secretary Scott Bessent touted aggressive buyback plans to stabilize markets. These buybacks, while not direct money printing, free up capital for hedge funds to continue purchasing treasuries.
Consequently, they ease funding conditions without central bank intervention. The market interpreted this as a liquidity-positive move, and Bitcoin found a local bottom around $74,500.
Buybacks Provide Silent Stimulus
While the buyback program doesn’t create new dollars, it changes market dynamics significantly. By purchasing illiquid off-the-run bonds and issuing new ones, the Treasury increases bond liquidity.
Hedge funds close their existing positions with profits and redeploy capital, repeating the cycle. As a result, volatility drops, margin requirements fall, and leverage increases.
Moreover, this setup mirrors late 2022, when the Treasury injected liquidity through bill issuance. At that time, Bitcoin bottomed and rallied massively. Today’s conditions point to a similar outcome.
As the fiscal deficit grows and bond issuance accelerates, Bessent must keep markets calm. Buybacks, coupled with reduced quantitative tightening, act as indirect stimulus. Bitcoin thrives under these conditions.
