Bitcoin climbed above $80,000, reaching its highest level in more than three months as a weaker U.S. dollar helped revive momentum across the broader crypto market. The cryptocurrency was last trading around $80,300 after briefly touching $81,200, putting it roughly 16% higher than a week earlier.
Two major forces appear to be driving the rally: strong demand for U.S. spot Bitcoin exchange-traded funds and the rapid closure of bearish positions as prices moved higher.
Earlier this month, the U.S. Treasury doubled its longer-term government bond buyback program from $2 billion to $4 billion. Although the move does not directly expand the money supply, it could contribute to lower long-term borrowing costs and create an easing-like effect in financial markets.
The announcement also renewed interest in the so-called debasement trade, in which investors seek scarce assets that may offer protection against currency depreciation, persistent deficits and inflation. Bitcoin’s fixed maximum supply of 21 million coins has reinforced its appeal as a potential hedge against dollar weakness.
The U.S. dollar weakened as Bitcoin advanced, with the ICE U.S. Dollar Index falling 0.8% during the week after the Treasury announcement. Gold also moved above its 200-day moving average, which was around $4,518 an ounce.
Short covering added another layer of momentum. Approximately $1.5 billion in Bitcoin short positions were liquidated during the rally, including about $700 million in a single minute. When traders close short positions, they must buy back Bitcoin, creating additional demand that can intensify an upward move.
The combination of ETF inflows and forced short covering helps explain the strength of the latest rally. Spot Bitcoin ETFs also provide investors with a regulated way to gain exposure through traditional brokerage accounts without directly holding the cryptocurrency.
Bitcoin Rally Keeps Bond Yields in Focus
The Treasury said its expanded purchases of longer-dated Treasurys would begin on September 9 as part of an effort to improve market liquidity. However, the initial positive reaction in the bond market quickly weakened.
The 10-year Treasury yield rose to 4.737%, while the 30-year yield climbed to 5.276%, according to Dow Jones Market Data cited by MarketWatch. Both yields returned close to levels recorded before the Treasury announced the larger buyback program.
Ian Lyngen, BMO’s head of U.S. rates strategy, pointed to concerns over de-dollarization, U.S. creditworthiness and a potentially higher term premium as key factors behind the recent bond-market selloff. His remarks indicated that the larger buyback program had done little to change the underlying pressures keeping Treasury yields elevated.
If Bitcoin can hold its breakout, the next major resistance zone could emerge between $95,000 and $100,000. However, the sustainability of the rally remains uncertain.
For now, Bitcoin’s August advance highlights how macroeconomic expectations, strong ETF demand and shifting market positioning can combine to produce a sharp move. The Treasury’s buyback decision has been viewed by some investors as having an easing-like effect, while Bitcoin’s limited supply continues to place it alongside gold as markets weigh concerns over dollar weakness and inflation.
