- Bitcoin is up about 20% this week, and analysts argue that may be just the beginning.
- Roughly $1.5 billion in short positions were liquidated, including approximately $700 million within a single minute, and as Bitcoin moved higher, forced closures of bearish positions added further buying pressure and accelerated the rally.
- The Treasury doubled its support for longer-dated government bonds in August, increasing its buyback program from $2 billion to $4 billion, which applied downward pressure on longer-term yields producing an easing-like effect for markets.
- Analysts see Bitcoin as a beneficiary of the Treasury’s support for long-dated bonds, which has revived the debasement trade narrative.
- Blockworks’ head of content Felix Jauvin said on Wednesday that "the dovish signals keep firing," pointing to a shift in marginal macroeconomic policy towards the Treasury.
- Matt Mena, a senior strategist at 21Shares, argued that expectations of a weaker dollar helped drive investors toward scarce assets such as Bitcoin, and the Treasury isn’t directly expanding the money supply, but markets are pricing the policy as easier financial conditions.
- For Bitcoin bulls, that strengthens the scarcity thesis, as maximum supply remains fixed at 21 million coins, attracting investors seeking protection against potential currency debasement, and the Treasury’s move strengthened Bitcoin’s structural investment case as a fixed-supply asset in a world of expanding money supply.
Bitcoin has experienced a remarkable 20% increase this week, with analysts suggesting this could be just the start of a larger rally.1
The surge is largely attributed to Treasury Secretary Scott Bessent’s support for long-dated bonds, which has reignited the debasement trade narrative.
According to Felix Jauvin, head of content at Blockworks, "the dovish signals keep firing," indicating a shift in macroeconomic policy that favors the Treasury.7
The U.S. government’s initiative to support AI infrastructure, financed through debt, aims to prevent long-term Treasury yields from rising excessively.
The Treasury doubled its support for longer-dated government bonds in August, increasing its buyback program from $2 billion to $4 billion. This move has applied downward pressure on yields, creating an easing-like effect for markets.45
Matt Mena, senior strategist at 21Shares, noted that expectations of a weaker dollar are driving investors toward scarce assets like Bitcoin.89
As Bitcoin's maximum supply remains fixed at 21 million coins, it attracts those seeking protection against potential currency debasement.101112
The recent Treasury actions have bolstered Bitcoin’s appeal as a fixed-supply asset in an environment of expanding money supply.
Notably, around $1.5 billion in short positions were liquidated, with approximately $700 million liquidated in just one minute, adding further buying pressure and accelerating the rally.23
Additionally, U.S. spot Bitcoin ETFs saw roughly $1 billion in net inflows during the first two weeks of August, indicating a growing regulated investment demand prior to the Treasury announcement.
“The Treasury doubled its buyback program for long-dated bonds to $4 billion in August, applying downward pressure on yields. Roughly $1.5 billion in short positions were liquidated, including $700 million in a single minute, fueling the rally.”
TradingView
