A major policy shift from the U.S. Treasury Department has ignited a powerful rally in Bitcoin, with the leading cryptocurrency now challenging the critical psychological barrier of $80,000. Treasury Secretary Bessent announced a plan to at least double the size of the long-term government bond buyback program, a move that has sent ripples through both traditional and digital asset markets.

The mechanics of this policy shift are clear. By increasing the single repurchase amount from $2 billion to $4 billion, the Treasury has altered the dynamics of the fixed-income market. The 30-year Treasury yield reacted sharply, dropping from 5.34% to 5.19%, which diminishes the appeal of risk-free assets and pushes capital toward higher-yielding investments like cryptocurrencies.

This macro shift has activated significant leverage in the derivatives market. Over Thursday and Friday, roughly $4 billion in bearish crypto positions were forcibly liquidated, creating a classic short squeeze that amplified the upward price movement. While analyst Jeff Coe noted that this action does not constitute traditional quantitative easing, he views it as a positive signal for overall liquidity conditions. The $78,000 to $80,000 range has now solidified as a robust technical support zone, and as long as prices hold above this level, the bullish structure remains intact.

Strong capital inflows are providing substantial backing for this rally. Data shows that U.S. Bitcoin spot ETFs recorded $1.6 billion in net weekly inflows, the strongest performance since October 2025. BlackRock (BLK.US) and its flagship IBIT (IBIT.US) fund have been standout performers, absorbing $503 million in a single day on Thursday. On a broader scale, total ETF assets under management have swelled from $70 billion in June to the current $85 billion, highlighting accelerating institutional allocation trends. Analyst Ted Pilos refined these figures further, noting that ETFs actually purchased $1.92 billion worth of Bitcoin, a weekly record that has helped stabilize the market during periods of volatility.

Analysts at Bernstein attribute this rally to a combination of improving regulatory conditions, sustained ETF demand, and overall loosening liquidity. As prices recover, early investors are seeing their balance sheets improve dramatically. Strategy (MSTR.US) currently holds 840,447 Bitcoins with an average cost basis of approximately $75,385. With Bitcoin trading near $78,000, this position has generated more than $2 billion in unrealized gains. Although the company recently trimmed about 0.8% of its holdings to meet corporate financing needs, Bernstein anticipates that Strategy (MSTR.US) will likely resume its buying strategy as profit margins expand. If this materializes, it would further validate institutional confidence in Bitcoin's long-term value and provide additional buying pressure for a decisive breakout above $80,000.