US Reportedly Set to Cut Long-Term Bonds, What Impact Will It Have on Bitcoin Prices? - Fintech World

The US is reported to be set to cut long-term bonds. Will this impact Bitcoin prices?

Global financial markets are closely monitoring the potential changes in the financing strategy of the United States (US) government debt. The US Department of the Treasury is expected to reduce the issuance of long-term bonds and increase the use of short-term debt instruments to meet the country's financing needs.

These changes could potentially affect the bond market, interest rate movements, and investor sentiment towards riskier assets like Bitcoin (BTC).

According to an analysis by Citigroup reported by BeInCrypto on Monday, October 12, 2026, the US Department of the Treasury is expected to cut the auction value of 20-year and 30-year bonds by US$3 billion each.

In fact, Citigroup predicts that there is a possibility that the US government may stop issuing 20-year bonds altogether.

However, this policy has not been officially announced yet.

Investors are now awaiting the announcement of the US government's debt financing strategy scheduled for November 4, 2026.

Citigroup Predicts US to Cut Long-Term Bonds

Citigroup predicts that the US government will adjust the composition of its debt issuance.

In this scenario, the US Department of the Treasury will reduce the offering of long-term bonds and replace them with the issuance of short-term debt instruments.

The 20-year and 30-year bonds are expected to be the most affected instruments.

Each auction is predicted to experience a reduction of US$3 billion.

This change could potentially be a significant step in managing US government debt, especially when long-term borrowing costs are at high levels.

However, it should be emphasized that Citigroup's forecast is an analysis of potential policy, not an official government decision.

The US Department of the Treasury still needs to consider funding needs, investor demand conditions, and long-term financing risks.

Why Does the US Want to Cut Long-Term Bonds?

One of the main factors driving this forecast is the increase in yields on US government bonds.

According to data from the US Department of the Treasury, the yield on 10-year Treasury bonds closed at 5.24% on October 9, 2026.

Meanwhile, the yield on 30-year bonds reached around 5.60%.

Yield is the rate of return that investors receive when they buy bonds at a certain price and hold them according to the terms.

When yields increase, the government generally has to offer higher funding costs to issue new debt.

This situation can be problematic for a government with significant financing needs.

By reducing the issuance of long-term bonds, the US Department of the Treasury may be attempting to limit pressure on borrowing costs for those maturities.

However, a reduction in bond supply does not always guarantee that yields will fall.

Yield movements are also influenced by inflation expectations, Federal Reserve policies, investor demand, and the government's fiscal conditions.

US Treasury Yields Reach Highest Level in Decades

Pressure in the US bond market is becoming a growing concern as the 10-year Treasury yield reached its highest level since April 2002 in early October.

This increase indicates that investors are demanding higher returns to hold US government debt.

Several factors can influence this condition.

One of them is the concern that inflation will persist longer than expected.

Additionally, the significant financing needs of the US government may also affect the balance between the supply and demand for bonds.

When the supply of debt securities increases while demand does not grow proportionately, bond prices can come under pressure.

In the bond market, prices and yields move in opposite directions.

When bond prices fall, yields tend to rise.

This situation poses a challenge for the US government as the cost of debt financing may become increasingly expensive.

US Treasury Has Already Bought Back $6 Billion in Bonds

The US government has previously taken steps to manage bond market conditions.

On October 1, 2026, the US Department of the Treasury utilized the maximum limit of the bond buyback program of $6 billion.

This action was taken on long-term debt securities that had been previously issued.

The bond buyback program can help improve liquidity in certain segments of the Treasury market.

Through this mechanism, the government buys back some of the circulating bonds according to the program's objectives.

However, the bond buyback is different from the decision to reduce the issuance of new debt.

Both have mechanisms and operational goals that are not entirely the same.

Therefore, the $6 billion buyback cannot be seen as confirmation that the government will cut the auctions of 20-year and 30-year bonds.

Short-Term Debt Becomes an Alternative

If the issuance of long-term bonds is reduced, the US government still needs alternative sources of financing.

One alternative anticipated by Citigroup is to increase the issuance of Treasury bills or short-term debt securities.

These instruments typically have a maturity of no more than one year.

From the current funding cost perspective, short-term debt securities appear cheaper compared to long-term bonds.

On October 9, 2026, the three-month Treasury yield was around 4.25%.

This figure is significantly lower than the 30-year bond yield, which reached 5.60%.

The difference of about 1.35 percentage points indicates the difference in funding costs under current market conditions.

However, choosing short-term debt securities also carries its own risks.

The Risk of Refinancing US Debt Could Increase

Short-term debt securities have a faster maturity.

This means the government must issue new debt more frequently to replace maturing debt securities.

This process is known as refinancing.

If interest rates rise in the future, the government may face higher financing costs when refinancing.

Conversely, if interest rates fall, using short-term debt securities can provide advantages as the government can obtain new funding at lower costs.

Thus, the strategy of increasing the proportion of short-term debt has different consequences compared to locking in funding costs through long-term bonds.

This strategy can reduce interest burdens in the short term but increase financing sensitivity to interest rate changes.

US Government Debt Exceeds $40 Trillion

The debate over bond issuance strategies is becoming increasingly important due to the size of the US government's debt.

According to data cited by BeInCrypto, the US national debt has exceeded $40 trillion as of August 2026.

Meanwhile, the interest cost of government debt is around $1.1 trillion per year.

This figure highlights the significant burden the government must manage in financing its debt obligations.

When the debt amount is very large, small changes in the average borrowing cost can have a significant impact on interest expenditures.

Therefore, decisions regarding the tenor of debt securities become an important part of fiscal management strategy.

However, reducing long-term bonds is not an automatic solution to the debt problem.

The government still needs to secure sufficient financing to meet its obligations and budgetary needs.

Analysts Doubt the Effectiveness of Treasury Strategy

The plan anticipated by Citigroup has also drawn attention from several bond market analysts.

BNP Paribas strategists question whether reducing long-term bond issuance can truly lower the overall borrowing costs for the government.

A similar view was expressed by Kevin Flanagan, Head of Fixed Income Strategy at WisdomTree.

Flanagan questions the government's ability to replace long-term financing needs with other instruments without creating additional consequences.

The main issue lies in balancing short-term interest savings against refinancing risks.

If the government increasingly relies on short-term debt securities, the need for refinancing may increase.

At the same time, demand for Treasury bills must remain strong for the government to secure funding at competitive costs.

What is the Relationship Between US Bonds and Bitcoin?

Changes in US bond issuance strategy could potentially affect Bitcoin through liquidity conditions and financial market yield rates.

Bitcoin is an asset that does not provide direct interest to its holders.

In contrast, US government bonds offer interest payments or yields according to the characteristics of the instrument.

When Treasury yields rise, some investors may perceive bonds as more attractive compared to riskier assets.

This condition could potentially reduce interest in Bitcoin and other cryptocurrencies.

Additionally, rising yields may reflect tighter financial conditions.

This could affect funding costs and the risk appetite of global investors.

However, the relationship between Bitcoin and Treasury yields is not always consistent.

BTC prices are also influenced by institutional demand, ETF activity, derivatives markets, and developments in the crypto industry itself.

Can Bond Cuts Drive Bitcoin Up?

If the US Department of the Treasury truly reduces long-term bond issuance, one possible impact is a decrease in supply pressure in the long-term bond market.

If investor demand remains strong, this condition could help contain yield increases or even push them down.

Lower yields could improve sentiment towards riskier assets, including Bitcoin.

However, this scenario does not happen automatically.

The market may also interpret increased issuance of short-term debt securities as a growing need for government refinancing.

Additionally, inflation movements and Federal Reserve policies may continue to dominate yield directions.

Therefore, investors should not immediately consider a reduction in long-term bond issuance as a bullish signal for Bitcoin.

The actual impact will depend on the reaction of the bond market and liquidity conditions after the policy is announced.

Bitcoin Price Moves Around $84,000

Amid increasing attention to the Treasury market, Bitcoin is still experiencing volatility.

In a BeInCrypto report on October 12, 2026, BTC was trading around $84,030, gaining about 1.2% in 24 hours.

The strengthening occurred after Bitcoin previously faced pressure when U.S. Treasury yields increased.

This condition illustrates how changes in bond market sentiment can occur alongside movements in cryptocurrency assets.

However, Bitcoin's daily increase is not enough to ensure that macroeconomic pressures have ended.

Investors still need to monitor whether Treasury yields rise again or begin to show stabilization.

Scott Bessent Under Spotlight in Bond Market

U.S. Treasury Secretary Scott Bessent has also drawn attention in the developments of the Treasury market.

In September 2026, Bessent made statements expressing his confidence in the government's ability to manage the bond market.

However, Treasury yields continued to rise after those statements.

This condition shows that government communication alone may not necessarily change market direction.

Bond investors continue to consider fundamental factors such as inflation, government financing needs, and interest rate prospects.

Therefore, concrete actions from the U.S. Department of the Treasury in November will attract greater attention compared to market speculation.

November 4 Decision Could Determine Market Direction

Investor attention is now focused on November 4, 2026.

On that date, the U.S. Department of the Treasury is expected to announce statements regarding debt financing strategies or quarterly refunding.

This announcement could provide certainty on whether the government will indeed reduce the issuance of 20-year and 30-year bonds.

Before that, the Treasury Department is also scheduled to conduct a survey of bond dealers to gain insights into market conditions and issuance needs.

There are several possibilities to consider.

If long-term bond issuance is reduced, investors will monitor the response of yields and demand for Treasury bills.

If the issuance structure remains unchanged, the market will need to reassess expectations previously built based on Citigroup's predictions.

In both scenarios, the impact on Bitcoin will depend on changes in overall financial market conditions.

Conclusion

The U.S. Department of the Treasury is expected to consider changing debt financing strategies by reducing long-term bond issuance.

Citigroup predicts a reduction in the auction of 20-year and 30-year bonds by US$3 billion each.

The U.S. government is expected to rely more on short-term debt securities that currently offer lower funding costs.

However, this strategy also increases refinancing risks as the debt securities must be renewed more frequently.

This forecast comes as 10-year Treasury yields reach 5.24% and 30-year yields hover around 5.60% on October 9, 2026.

For Bitcoin, changes in bond issuance could affect liquidity conditions and sentiment towards risk assets.

If long-term yields decline, Bitcoin could potentially gain sentiment support. However, the impact cannot be guaranteed as the market is also influenced by inflation, Fed policies, and other factors.

The official decision from the U.S. Department of the Treasury expected to be announced on November 4, 2026, will determine whether Citigroup's scenario truly materializes.

This article is informative and does not constitute investment advice. Cryptocurrency prices carry high risks and volatility.

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