Bitcoin, Yen, and Debt: Scott Bessent Challenges Traders Worldwide

The U.S. Treasury is raising its voice. Scott Bessent has warned traders tempted to bet against interventions aimed at supporting the Japanese yen. The Treasury Secretary claims to have asymmetric information and now asserts that he holds the bank against speculators. This statement comes as Washington doubles some long-term bond buybacks, while Bitcoin hovers around $80,000.

Key Points

• Scott Bessent now claims to hold the bank against traders positioned against the yen.
• The Treasury is increasing some long-term bond buybacks to at least $4 billion per operation.
• These buybacks support liquidity in the bond market but do not correspond to monetary creation by the Fed.
• The Treasury also influences the crypto sector through the GENIUS Act and the strategic reserve of bitcoins.

A former hedge fund manager, Scott Bessent knows the strategies used in currencies and bonds. His statements refer to the coordinated actions of the United States and Japan to support the yen:

I have asymmetric information. [...] And now, I am the one holding the bank. Scott Bessent, U.S. Treasury Secretary -- Source: Bloomberg

According to the Financial Times, this warning follows a rare coordinated intervention by the United States and Japan to support the yen. Through his exchanges with the Japanese government and the Bank of Japan, Scott Bessent claims to better understand their intentions than traders, thus discouraging them from betting against the Japanese currency.

Meanwhile, the Treasury has raised the ceiling on its long-term securities buybacks. Since September 9, some operations can reach at least $4 billion, up from $2 billion previously. This measure remains applicable until the next quarterly refinancing, scheduled for November 4. The $8 billion figure mentioned by some traders is an anticipation and not an official decision.

Bitcoin Reacts to Liquidity Conditions

The buybacks allow the Treasury to withdraw from the market certain older and less liquid securities while continuing to issue new bonds to finance the government. They may reduce tensions on yields but do not constitute a monetary creation operation comparable to the Federal Reserve's asset purchases. The official statement presents the mechanism as a support for liquidity.

Bitcoin has risen by about 20% following the initial announcement in August, before returning to the $80,000 range. However, this proximity in timing is not sufficient to establish a causal link. Flows into ETFs, interest rate expectations, and the evolution of the dollar also contribute to the movement.

The Treasury, however, has more direct levers on the sector. It oversees the implementation of the GENIUS Act, which requires stablecoin issuers to maintain liquid reserves, particularly in dollars and short-term government securities. Their growth could thus support demand for Treasury bonds.

For Bitcoin, the immediate issue lies mainly in the effect of these buybacks on bond yields and the dollar. Their doubling could alleviate some tensions on U.S. debt, but it will not automatically trigger a new wave of liquidity. At this stage, the program constitutes a targeted support for the bond market, not a guarantee of a rise for cryptocurrencies. Wait and see.