U.S. Treasury Secretary’s Actions Strengthen Bitcoin Narrative

Written by Matt Hougan, Chief Investment Officer at Bitwise

Compiled by Chopper, Foresight News

Multiple factors are driving the current rally in Bitcoin and cryptocurrencies. Last week, the U.S. Securities and Exchange Commission (SEC) unveiled a proposal for regulations on crypto assets, paving a compliant path for new crypto projects to launch. The White House also convened a meeting with executives from the crypto industry, sending positive signals toward the sector. Upon the announcement, the crypto market surged rapidly, trapping short sellers who were forced to close their positions.

But the most important catalyst came from U.S. Treasury Secretary Scott Bessent, who ignited last week’s rally and propelled Bitcoin toward a new all-time high.

Let’s review this week—it was the most important week for Bitcoin over the past year.

Bessent's first move was to announce plans to intervene in the long-term U.S. Treasury market.

Last Wednesday, the Treasury Secretary announced that the Treasury would double the size of its regular repurchases of long-term Treasuries, increasing from $2 billion to $4 billion. At the same time, the yield on 30-year U.S. Treasuries reached its highest level since 2007.

In terms of scale alone, this move is not significant. The U.S. Treasury issues trillions of dollars in debt annually, so a few billion in repurchases is a drop in the ocean. The key is not the size of the repurchases, but the signal they send. Although Bessent has characterized this as a “liquidity management tool,” the market interprets it as an artificial suppression of long-term interest rates—a classic form of financial repression. And Bitcoin thrives under precisely such financial repression.

When governments intervene to suppress long-term interest rates, savers' returns on stable assets shrink, while inflation continuously erodes purchasing power. Capital often flows into scarce assets such as gold and Bitcoin. Unsurprisingly, both gold and Bitcoin rose in tandem following the announcement.

Initially, Bessent's actions showed some effect: the 30-year U.S. Treasury yield briefly fell from 5.29% to 5.20%, and the benchmark 10-year U.S. Treasury yield dropped from 4.70% to 4.65%.

However, the market trend did not last; yields quickly rebounded and returned to their previous highs. It became clear that a stock of $4 trillion in debt far exceeds what a $40 billion buyback could move.

Bessent did not back down; instead, he indicated that the repurchase scale could exceed $40 billion. When this statement still failed to stabilize the bond market, he further proposed that the Treasury could utilize nearly $1 trillion from its General Account to conduct larger-scale Treasury buybacks.

Within just about 48 hours, market expectations shifted from a $20 billion liquidity operation to the possibility of deploying $1 trillion to support long-term U.S. Treasuries. This shift sent shockwaves through the entire investment community.

Ray Dalio, founder of Bridgewater Associates, publicly stated that investors should allocate to gold and bitcoin; macro hedge fund manager Stanley Druckenmiller criticized this behavior as "price manipulation," saying its negative impacts far exceed the $4 billion figure; economist Mohamed El-Erian compared this experiment to Japan’s monetary policy, which had severe consequences.

This discussion has brought the $40 trillion U.S. national debt issue back into the public spotlight, making currency depreciation a hot topic among global economists. Undoubtedly, Bitcoin has fully capitalized on this narrative advantage.

Beyond bond market moves, Bessent held a press conference on Monday, announcing what he called an "economic offensive" against Iran's global financial networks.

He referred to this operation as the "D-Day of finance," stating that the current administration will push to sever Iran's ties with the global economy and impose sanctions on all companies and countries doing business with Iran. "Any entity facilitating money laundering for Iran will be expelled from the dollar system—the countdown has already begun."

This statement brings to light the underlying truth: access to the U.S. dollar financial system is a tool of American power. More importantly, the United States is willing to actively deploy this weapon.

This scene evokes memories of the U.S. freezing Russia’s foreign exchange reserves following the 2022 Russia-Ukraine conflict—a move that directly triggered a surge in gold and Bitcoin prices.

As countries instrumentalize their payment systems for geopolitical purposes, markets will inevitably seek neutral alternative assets. Bitcoin is the only monetary asset that can be directly and autonomously held, is scarce, and can be transferred globally without reliance on any single political entity’s banking or custody system. While gold is an excellent store of value, its weight and difficulty in transportation and division make it impractical for transactions.

The more the global financial system becomes a tool for geopolitical competition, the higher the value of a neutral financial network.

Within just one week, Beasant, through policy actions by the U.S. government, inadvertently reinforced two core logic points of Bitcoin: on one hand, he implemented a flexible yield curve control, driving capital into hard assets; on the other hand, he made the world aware that the value of a neutral monetary settlement layer is rising.

Amid ongoing global balance sheet expansion, continuous improvement in Bitcoin access channels, and leading asset management firms incorporating Bitcoin into their standard portfolios, a highly favorable environment for Bitcoin has now emerged.