Bitcoin (CRYPTO: BTC) rose 6% and Ethereum (CRYPTO: ETH) surged 8% following a US Treasury announcement to double its long-term bond buyback operations. The department stated it will increase liquidity support for longer-dated nominal coupon securities from a maximum of $2 billion to at least $4 billion per operation.

The change takes effect September 9 and runs through November 4, 2026. The announcement triggered immediate gains across digital assets, with Solana (CRYPTO: SOL) spiking 7% and XRP (CRYPTO: XRP) gaining 4%. Gold also surged 3.5% to $4,487 per ounce, reaching its highest level since June 4.

Market Reaction and Yield Dynamics

The Treasury move knocked 30-year yields sharply lower from near 19-year highs while the dollar index fell 0.8%. Traders interpreted the buyback program as "QE Lite," signaling that the Federal Reserve’s ability to keep tightening is constrained. TD Securities noted in a report cited by Reuters that Treasury liquidity support, combined with a Fed willing to look through an energy shock, should push real rates lower. This setup favors hard assets like gold and risk assets like crypto.

Peter Schiff’s Inflation Warning

Peter Schiff argued on X that the Treasury is stepping in to buy long-term bonds private investors no longer want, with funds created by the Fed. He noted gold was already up $125 on the news. Schiff added that funding these buybacks through short-term debt issuance drives up federal interest expense and widens the deficit. He stated this makes it harder for the Fed to raise rates, creating pressure for rate cuts and quantitative easing even as inflation rises.

What the Numbers Show

The simultaneous surge in gold (+3.5%) and Bitcoin (+6%) alongside a falling dollar index (-0.8%) indicates a broad rotation into non-dollar assets. The magnitude of the crypto rally exceeds the gold rally by nearly double, suggesting higher sensitivity to liquidity expectations among digital asset traders compared to traditional safe havens.

Technical Outlook for Bitcoin

Bitcoin cleared its descending trendline and three-month range ceiling in a single session, reaching $68,500. The 20-day and 50-day EMAs now sit below price action as rising support. Key technical levels include:

• $65,800 — prior resistance, must hold as new support
• $71,468 — 200-day EMA, next upside target

Asset manager VanEck reported on Tuesday that 8 of 12 capitulation signals for Bitcoin (CRYPTO: BTC) are currently active as 30-day realized volatility dropped to 27.2% annualized. This figure is well below the long-run average of near 80%, marking the lowest reading in years according to the firm's mid-August Bitcoin ChainCheck.

Capitulation Signals and Cycle Context

VanEck senior analyst Patrick Bush and head of digital assets research Matthew Sigel noted that all 12 capitulation signals hit extreme zones at some point in the past three months. As of August 12, eight remained active.

The current drawdown stands at minus 49%. VanEck argued that comparing this to prior bear markets featuring drawdowns of minus 94%, minus 85%, minus 84%, and minus 78% is misleading for three reasons:

• Prior deep troughs occurred before spot ETFs existed and before institutions held meaningful Bitcoin positions.
• Every prior cycle ended with a major blowup forcing mass liquidations, such as Celsius, Three Arrows Capital, and FTX.
• This cycle has seen none of those events, leading VanEck to conclude the bottom should be shallower than historical averages suggest.

Cycle Clock and ETF Flows

The drawdown from the October 2025 peak entered its 10th month in August. Across four prior completed cycles, the peak-to-trough phase averaged 11 months on the full sample and 12.7 months excluding 2011. This places the historical window for a transition into accumulation between September and November 2026.

Spot ETF inflows turned positive over the past 30 days, pulling in roughly $663 million net. This marks a clear reversal from the prior month when ETFs shed roughly $2.4 billion. Meanwhile, spot trading volume remained in only the 10th percentile of its history, at levels last seen during the 2023 bear market.

Long-Term Holder Activity

Coins held longer than one year fell by 356,000 BTC over 30 days, dropping the long-term supply share below 60% for the first time in months. The selling concentrated in the one to five year bands rather than the oldest coins, pointing to portfolio churn rather than a wholesale exit.

VanEck raised the possibility that some movement reflects security-driven wallet migration following the Coldcard firmware exploit. However, the firm noted that the roughly 1,800 BTC of confirmed loss is too small to explain the 356,000 BTC of net movement.

What the Numbers Show

Institutions paid heavily for downside protection, pushing the put/call premium ratio to an all-time extreme of 2.30 against a normal reading of 0.71. This divergence occurred while implied volatility sat near record lows. Traders are paying more than ever to hedge against a drop even as actual price swings have nearly disappeared.