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

Bitcoin surged past the $80,000 mark to reach a three-month high on Tuesday, driven by a weaker US dollar following Treasury Secretary Scott Bessent's efforts to calm the bond market. President Donald Trump had previously urged Congress to pass legislation that would provide clearer definitions for the expanding cryptocurrency industry.

Since then, Bitcoin has experienced a 16% increase, reaching a high of $80,323.24 in Asian trading hours, surpassing its previous peak since mid-May. Over the course of August, Bitcoin has surged by 28%, marking its largest monthly gain since November 2024.

Cryptocurrencies experienced a significant boost after the US Treasury announced plans to repurchase longer-dated bonds to curb the rise in long-end yields. This move has resulted in the US dollar bearing the brunt of investor concerns. Tim Sun, a senior researcher at HashKey Group, noted that Bessent's statements have reinforced the market's belief that policymakers may display less tolerance for further increases in long-end yields through the midterm elections.

This stance could create a more favorable environment for assets like Bitcoin and gold through the midterm period, according to Sun.

Gold also benefited from the weakening dollar, reaching a three-month high. Treasury's move was deemed highly appealing to Bitcoin, as the cryptocurrency is designed to enable investors to circumvent such interventions. Geoff Kendrick, the global head of digital assets research at Standard Chartered, stated that the Treasury's actions align perfectly with what Bitcoin is intended to offer.

Consequently, this has sparked renewed interest in the so-called debasement trade, where efforts to prevent long-end yields from reaching market-clearing levels through buybacks redirect pressure from the bond market to the currency market.

According to Tony Sycamore, a market analyst at IG, the Treasury announcement prompted investors to pour funds into both physical and digital assets as fears of currency debasement resurfaced. A sustained break above this level could potentially pave the way for Bitcoin's price to extend towards $95,000 and $100,000.