IS CRYPTO BACK? Bitcoin Price EXPLODES (US Treasury & Bond Markets PANIC) Transcript, AI Summary & Key Points

Maybe I shouldn't have sold my bitcoins. So, is crypto back? Well, Bitcoin has jumped 11%. Ethereum is ripping up 19%, roughly $3 billion in shorts liquidated. Now, crypto added about $280 billion in market cap in just one day. But the weird thing was the market moved for reasons completely unrelated to crypto. There was no new adoption breakthrough, no protocol upgrades, no Bitcoin having.

So, what happened? Well, the US Treasury decided they didn't like the long-term bond markets, and so they added a twist. And so, in this video, we're going to get into exactly what Treasury Secretary Besson did, and what I believe he saw, because underneath all of this is one fight, AI versus the US debt crisis. Let's break it down. I got something new today.

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So go to techpro.com. Use your EtherFI card, get your free 50% off, and let's get to work. Now, on the surface level, three factors moved the markets this week. One, the Treasury decided to double their long-end bond exposure buybacks from 2 billion to at least $4 billion per operation in the 10-year to 30-year bond sector starting September 9th. Now, what this means is that the government is buying more of its own debt because nobody else really wants to buy it, causing the yields to go up, and they want to bring that

yield down. The 30-year just hit 5.34% the highest rate in almost 20 years. Today, Treasury Secretary Bessant went further on NBC the buybacks could be even larger than 4 billions. >> The we're trying to signal that we think that this is a thinly traded area of the market. We routinely do buybacks and we're going to increase the size of the buyback.

And you know, Sarah, I would note that it could be more than the 4 billion per issue. He called the 30-year Treasury very poor on liquidity, blaming thin August trading, heavy corporate issuance, and said the market is not looking at the underlying factors. And he used the phrase treasury twist. >> You know what I would call a treasury twist here >> and yields he say do not reflect fundamentals.

So let's get into what he meant by all of this a little bit later on. But the second factor was the SEC floated regulated crypto assets. And then the third reason was the president hosted a crypto executives industry summit with Coinbase, Ripple, Gemini, Kraken, Robin Hood. And they told Congress to try to pass the Clarity Act. The securities and the commodities chairs were in the room as well.

But the Treasury move is the real policy. And the crypto regulatory stuff was mostly just marketing show and optics. So what's the deal with crypto anyways? Anyone watching the crypto markets knows it has been dead sideways with very low volatility and movement for weeks. Bitcoin is stuck in the low 60s. A giant pile of traders are leaning short. And so in a boring range, this was the obvious trade.

Everybody knew it. And that's the problem. As soon as the price started ticking up a little bit on a little bit of marketing news, the president hosts another crypto summit at the White House. While these leverage shorts do not get an opinion about their trade, the exchange is closing their bets for them and closing the shorts forcibly. Now this buying pressure is causing a short squeeze which is liquidating more shorts which forces more buying.

And so it's a cycle of liquidations buying forced to buy. What we saw was over 24 hours roughly $3 billion in liquidations more than 90% shorts. It was a record shorts wipeout. one of the largest total liquidation days on record. More than 170,000 traders got run over. So, when you see people say there's record demand for crypto, well, no, it's not really retail traders buying this up.

Rather, understand that most of the buying you saw were from people who hated crypto. They hate Bitcoin and they were forced to buy back at gunpoint. And this is not real conviction buying and it's not long-term and it's not sustained. So, real money, however, some of it did show up. spot. Bitcoin ETFs took in $517 million. The biggest in a day in about three and a half months, Ether funds took another 190 million, but the number one buyer, the ones buying $3 billion worth of this stuff, was still the margin cause.

And retail is largely still sitting this move out. Institutions have been accumulating while smaller holders sold. Crypto Twitter, you have to remember, is an echo chamber with the zero sum mechanics. And so what you're seeing is it's a lot of waves, but the sea level in crypto is not rising. But what triggered this wave? And that was an announcement from the US Treasury, which lasted for about 1 day.

30-year yields dropped about nine basis points. The dollar softened and risk assets went up. After just 24 hours, though, things were looking back to normal. The US 30-year Treasury yield rates were climbing again. The Dow has sold off hundreds of points. SpaceX is back under its IPO price. Bond yields are creeping back up. If you do the actual math, you'll understand that the Treasury is mostly signaling and it doesn't have that much gunpowder to play around with.

>> Part of it is signaling here and to show that we we believe that the yields don't reflect the underlying fundamentals. >> The Treasury market is north of $30 trillion. Public debt just crossed $40 trillion, record high in this week. A few billion dollars of operation is not a solution. It's a signal as Besson has said and critically is this. If you read between the lines of his interview, you'll understand he's not mentioning this is going to affect the Federal Reserve in any way and it's not going to affect the

budget. >> Again, uh you know, I think that the Treasury and Fed would work together if there was any change in the balance sheet. And so the speculation is he may be changing how the overall pie is sliced but not increasing the size of the pie. Now JP Morgan was concerned but this only addresses the symptoms and not the root cause. The US is running roughly a 6% deficit in an economy near full employment absent real fiscal consolidation.

We fear the markets will view this action as lacking credibility. If Treasury gets more opportunistic and walks away from regular and predictable issuance term premium and yields could go higher. actually over time not lower. But Besson's answer was >> sir, there's nothing magic about the 40 trillion number uh and we can grow our way out of that. So >> grow our way out of $40 trillion in debt using chat GPT.

Well, this is what Besson believes and I believe this is what he meant by having asymmetric information, seeing things that the market does not see. >> You know, again, people have bad information. I have asymmetric information. So look, the if we're going to see this incredible productivity growth from AI, that will naturally disinflate rates. So the thing that they are building is going to cause disinflation.

And I don't see why our productivity growth couldn't be 2.5 or 3%. And that is what will create the economic growth and the disinflation. >> You see, according to him, AI productivity should cause disinflation actually. and the big AI tech companies should be issuing debt in the belly, so to speak, not on the long end, which is what they're currently doing.

So, more in the 5-year range. >> I I actually think it's interesting that they're issuing such long-term debt. If I were sitting in the chief financial officer's seat, you know, I I would think about issuing more uh what's called the belly uh debt, you know, kind of 5-year debt >> because according to him, and we're betting the whole house on this, if AI is able to really generate productivity gains in the next 5 to 10 years, and it better, then the disinflation will also occur in this 5 to 10 year range, and we will

not have inflation over the 30-year range. And so the trade here is you buy the 30-year bonds and you sell them back into the five and 10ear bonds. And so that's what he's doing. He's buying up the long-term bonds and selling the short-term debt. And that is this debate in one line. Treasury is betting that AI and growth will beat the US debt crisis.

The market is testing whether that's true or not. Now what about the rest of this sideshow with the crypto industry executives call to the White House? Well, that was about trying to pass the Clarity Act, which would define which tokens are commodities and which are securities. Now, there will be a procedural vote September 15th. Poly Market gives it just about 25% chance of passing.

It's not even close. The Republicans need roughly seven more Democratic votes to pass this act. And then we saw hype. The decentralized perpetuals exchange token jump roughly 20% on a presidential shout out. Mike is also working to bring Hyperlquid into the United States. >> Now, I like hype, but can you imagine a shout out? This is not the license, not the vote, not a bill or law, not a framework.

Hyperlid is not getting regulatory clearance just because the president gave it a shout out or because someone from the CFTC says he's trying to work on it. You're going to need a bill from both parties for this to pass. And so, the real story is ask yourself why the Treasury even had to do this at all. And it's because the 30-year bond rate hit 5.34%.

Treasury auctions have been soft. Liquidity has been low. Nobody really wants to buy long-term US debt, which is causing US mortgage rates to spike, causing a potential US housing crisis. Because the deficit is still enormous, and the US debt just printed at $40 trillion. The Federal Reserve with the hawkish war is not coming to the rescue. Last meeting, three officials actually wanted to hike rates more.

to them inflation is still running too hot. And so Besson's bet here is that AI productivity will lower the pricing on the long end of the curve. What he did here was a market check to signal, hey, with AI, maybe there will be disinflation in the long term and maybe the long-term debt, the 30-year actually cheap and you should buy that up and you should sell the short-term debt.

But today's yield bounce and the equity selloff is the market answering maybe not. So is crypto back? Well, only if AI wins the death fight. But let me know your thoughts in the comments below. Are you buying crypto here? Are you sidelined? Or are you selling? See you in the comments and I'll see you in the next