How $739B in new US debt could absorb crypto’s liquidity before buybacks even reach Bitcoin

The US Treasury expects to borrow $739 billion from July through September while paying investors to hand back some of its older bonds. The pairing looks self-defeating because both transactions involve the same issuer. However, they are on separate ledgers and solve separate problems: auctions finance the government and create liquid benchmarks, while buybacks retire selected old issues or help Treasury manage its cash balance.Treasury's Aug. 3 borrowing estimate assumes a $950 billion cash balance at the end of September, then projects another $628 billion of borrowing from October through December. Its August refunding statement authorized as much as $38 billion of liquidity-support purchases and $25 billion of short-dated cash-management purchases during the current quarter.Treasury widened the program on Aug. 19, lifting the maximum size of each buyback in the 10-to-20-year and 20-to-30-year sectors from $2 billion to at least $4 billion for operations from Sept. 9 through Nov. 4.The announcement kept the regular auction schedule intact and confirmed that purchased debt will generally be replaced through new issuance, giving the government room to sell and buy bonds during the...