Following Treasury Secretary Scott Bessent’s actions to calm the bond market, a weakening U.S. dollar reignited momentum in the cryptocurrency industry, causing Bitcoin to surpass $80,000 and reach a three-month high on Tuesday.
Last week, U.S. President Donald Trump urged Congress to enact a bill that would give the expanding cryptocurrency industry more precise standards. The largest cryptocurrency in the world, bitcoin, has increased by 16% since then.
After reaching $81,237.94, its highest level since mid-May, it was last seen at $80,323.24 during Asian hours. August has seen a 28% increase in Bitcoin, which is expected to be its largest monthly rise since November 2024.
The U.S. dollar has been suffering the brunt of investor anxiety since the U.S. Treasury last week announced intentions to buy back additional long-dated bonds in order to help contain the gains in the long-end yields, which gave cryptocurrencies a significant lift as well.
According to Tim Sun, senior researcher at HashKey Group, Bessent’s statements have strengthened the market’s belief that U.S. authorities may be less tolerant of a further increase in long-term yields, at least through the midterm elections.
As a result, the macroenvironment for assets like gold and bitcoin would be comparatively favorable, according to Sun. The dollar’s decline has also benefited gold, which has risen to a three-month high.
Geoff Kendrick, global head of digital assets research at Standard Chartered, stated in a note last week that the Treasury move is “exactly the type of thing bitcoin loves,” adding that bitcoin was designed to give investors a method to avoid this kind government involvement.
The action fueled more discussion about the so-called debasement trade, in which buybacks to keep long-term yields from hitting market-clearing levels create pressure to move from the bond market to the currency market.
According to Tony Sycamore, a market analyst at IG, “buyers scrambled into physical and digital assets as debasement trade fears re-emerged after this (Treasury announcement).” “A advance toward $95,000–$100,000 might be possible with a sustained break above this point.”
