Bitcoin extended its last week’s winning streak and hit a 3-month high of $81.2K on the 25th of August.
The ongoing uptrend has been fueled by the renewed debasement trade as U.S. Treasury intervention in the bond market faces backlash and inflation fears.
Bond market crisis fuels Bitcoin
Notably, BTC began its explosive rebound last week after the Treasury announced a plan to double bond buyback from $4B to $8B. The move seeks to lower the yield (cost of government borrowing) for the 30-year bond below 5%.
Instead, the 30-year bond yield spiked again and shunned Treasury Secretary Scott Bessent’s plans.
In response, Bessent said the Treasury could tap into the $1T General Account (TGA) to accelerate the bond buybacks. Spending TGA typically increases the broad money supply and improves liquidity.
Unfortunately, analysts have slammed Bessent’s intervention methods. Legendary investor Stanley Druckenmiller blasted Bessent, adding that the bond market should freely determine where the yield goes.
Similarly, Peter Schiff scolded,
This reckless plan will substantially shorten the average maturity of the national debt…It’s a recipe for massive QE and runaway inflation. Got gold?
Indeed, gold pumped to a 3-month high of $4.6K after the update. And BTC followed the cue.
As of this writing, BTC’s price eased to $80.2K slightly but was still shy of the 50-week moving average of $81.8K. Reclaiming this would mark the end of the bear market, according to Galaxy Research.
Fundstrat’s Tom Lee also scored the Treasury’s $1T plan for the bond market as a net positive for the crypto.
This is positive for long duration assets (anything that investors see a value beyond 7 years): Long duration assets: equities, crypto, gold, real estate.
Is the Bitcoin bear market over?
Worth noting, the renewed debasement trade has also triggered strong U.S. Spot BTC ETF demand. The complex saw nearly $2B in weekly net inflows last week. On Monday, August 24th, they added $337.5M.
Notably, CryptoQuant data showed that the aggregated BTC demand (apparent demand) has also flipped positive for the first time in August since last November.
Perhaps the most notable was the firing of a Supply Profitability Crossing signal. The metric tracks bear market recoveries and was last seen in 2023, just before the 2024-2025 bull run began.
Historically, Bitcoin [BTC] posted 22%-50% gains in the next 6-12 months after the above metric was triggered.
That said, BTC must navigate this week’s macro risk events, including Wednesday’s PCE (inflation data) and Nvidia’s earnings report. Additionally, Fed chair Kevin Warsh’s speech at Jackson Hole on Friday could induce market volatility.
Overall, if the debasement trade holds and BTC decisively reclaims the 50-week MA ($82K), the market could be officially in the early innings of a new bull market.
Final Summary
- Bitcoin reclaimed $80K amid the Treasury’s new $1T bond buyback plan.
- BTC faces market volatility ahead of the PCE report and the Fed’s Warsh speech.
