U.S. Treasury Expands Buybacks, Utilizes Bitcoin

This policy created expectations that money would actually be released into the market, leading to an expansion of liquidity.

President Trump held a crypto summit, bringing together relevant cabinet secretaries and industry CEOs. After the meeting, during a press conference, he strongly pushed for the passage of the Crypto Act, expressing his intention to keep China in check.

Subsequently, the market shifted to a wait-and-see attitude, but even though AI-related assets rebounded again, capital did not exit the virtual asset market.

The midterm elections are a major political event in the U.S., and the current administration needs economic stimulus to win the election. The government intends to signal economic recovery to the market through a money-pumping strategy.

This interest rate gap reflects market distrust in future economic uncertainty and the U.S. fiscal condition. Some analysts suggest that if Treasury bond yields exceed 5%, the Trump administration would inevitably lose the midterm elections.

The U.S. government raises funds by issuing government bonds through the Federal Reserve (Fed). This method involves selling government bonds to raise funds, rather than directly printing dollars. However, creditors demand interest rate hikes or collateral, raising doubts about the government's credit limits.

The core of U.S. debt is not principal repayment, but managing the monthly interest burden. If the annual interest amount exceeds $1 trillion, the government faces a situation where essential budgets like defense spending must be cut. In fiscal year 2026, the total interest amount is projected to reach approximately $1.1 trillion, meaning interest rate hikes could further burden government finances.

Treasury Secretary Scott Bessent is leading this strategy.

The Trump administration announced it would infinitely buy back long-term government bonds through its buyback program. This means that with the Fed focusing on monetary policy and not intervening in government spending, the Treasury will directly utilize market liquidity. It shows the government seeking ways to inject money into the market instead of the Fed's quantitative easing (money printing).

With the Fed deciding not to increase base money, the market is questioning the Treasury's plan to supply liquidity through buybacks. The lack of clear specific funding plans for where the Treasury will get the money to release into the market increases market uncertainty.

Facing credit lending limits, the U.S. Treasury is being asked by global creditors to provide collateral. As a result, the U.S. government appears to be moving to utilize its real assets to repay debt.

Gold's book value is $10 billion, but its real market value is estimated at about $1 trillion. The U.S. officially holds 300,000 Bitcoins, and unofficially is estimated to hold about 1 million Bitcoins.

The U.S. government plans to avoid asset ownership transfer and use mortgage-style collateralized loans. By converting RWA (Real World Assets) into on-chain collateral and assuming a 10% reserve requirement, they envision amplifying asset value by 10 times, turning $7 trillion into $70 trillion.

The U.S. government is expected to become a key client in BlackRock's RWA business, resolving fiscal issues through the collateralization of its held assets.

The government is pursuing a strategy to maximize these four assets, increase collateral value through Wall Street's financial engineering, and use this to purchase long-term government bonds. This also includes restricting Nvidia semiconductor and AI service transactions to stablecoins.