Bitcoin rises above $80,000 as soft dollar, debasement fears boost momentum

Bitcoin surged above $80,000, reaching a three-month high on Tuesday, thanks to a weaker US dollar and Treasury Secretary Scott Bessent's efforts to stabilize the bond market, according to news wires.

Last week, US President Donald Trump urged Congress to pass a bill that would establish clearer definitions for the growing cryptocurrency sector. Since then, Bitcoin's value has increased by 16%, reaching $80,323.24 in Asian hours. It previously climbed to $81,237.94, its highest level since mid-May.

A coding flaw in the Bitcoin protocol was identified, but Bitcoin has still risen by 28% so far in August, marking its biggest monthly gain since November 2024. Cryptocurrencies received a significant boost after the US Treasury announced plans to purchase more long-dated bonds to curb the rise in long-end yields, causing the US dollar to bear the brunt of investor concerns.

Tim Sun, a senior researcher at HashKey Group, stated that Bessent's messaging has reinforced the market's belief that US policymakers might exhibit lower tolerance for further long-end yield increases through the midterm elections. This would create a relatively favorable macro environment for assets like Bitcoin and gold.

Gold also benefitted from the weakening dollar, reaching a three-month high. The Treasury's announcement is "exactly the kind of thing Bitcoin loves," according to Geoff Kendrick, global head of digital assets research at Standard Chartered. Kendrick added that Bitcoin was designed to provide investors with a way to evade such interventions.

The move sparked renewed discussions about the 'debasement trade,' where attempts to prevent long-end yields from reaching market-clearing levels through buybacks shift the pressure from the bond market to the currency market.

"Buyers scrambled into physical and digital assets as debasement trade fears resurfaced following the Treasury's announcement," said Tony Sycamore, a market analyst at IG. "A sustained break above this level could open the door for a move toward $95,000–$100,000."