Bitcoin held near the $80,000 level on Sunday having briefly surpassed the threshold a day ago, as investors turned their attention to the U.S. Treasury’s debt buyback operations which could provide fuel for financial markets.
Bitcoin, Crypto Market Could Turn Bullish Amid Treasury Buybacks
As of writing, Bitcoin was trading around $79,800 while the overall crypto market remained solid after rallying in August. The traders are now focusing on macro-economic updates, such as the rising oil price, the climbing Treasury yields and the growing buyback program by the Treasury. In addition, the upcoming U.S. CPI and PPI inflation data is under radar.
“With oil prices and Treasury yields rising amid geopolitical tensions, macro conditions remain a key risk for digital assets. For now, markets appear to be digesting August’s strong gains rather than entering a broad-based risk-off phase,” remarked Riya Sehgal, Research Analyst at Delta Exchange, according to MoneyControl.
The U.S. Treasury’s most recent quarterly schedule specifies liquidity support buybacks through early November with a combined maximum purchase of approximately $22.75 billion for various operations.
It includes the Treasury’s securities from the short-term bills market to long-dated bonds, and several of the operations are for up to $4 billion, following recently, when the Treasury doubled the size of some long-end operations to boost liquidity.
Treasury buybacks, however, do not entail printing new money as does quantitative easing. Instead, the government buys more old bonds that are not as liquid from the market, thus giving back the money to the investors and enhancing the trading conditions in the Treasury market. The liquidity injection boosts risk assets, generating a lot of interest from crypto market participants.
XRP Joins the Bullish Narrative
The positive liquidity conditions also boost the mood of the key altcoins, including XRP. An analyst on X wrote, “XRP looks amazing. The $2.30 level could come sooner than expected. Multiple formations and technical setups are perfectly pointing toward the same target.”
The chart above illustrates that XRP is breaking out of a long-term downward trendline that it had been trading within for many months. The token had rebounded from a support area around $0.99, find its way above the $1.45 mark and is currently trying to make that $1.45 area its next level of support.
The analyst anticipates a short term consolidation period followed by a breakout with the chart indicating the $2.33 level, which is approximately a 54% advance from current levels.
Institutional Demand Remains Strong
In the midst of the market’s volatility, Bitcoin is still gaining institutional backing. Despite Friday’s $201.9 million outflow, U.S. spot Bitcoin ETFs had $924.48 million in net inflows for the latest completed week. Over the same timeframe, spot Ethereum ETFs saw a whopping $824.42 million flow.
“Historically, strong August gains have often been followed by September pullbacks. However, Strategy’s purchase of 4,603 BTC worth $370 million has provided support,” stated Prateek Gupta, Head of Business at Mudrex.
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