Bitcoin rallies 20% as Treasury bond support revives debasement trade

Bitcoin rose about 20 percent this week to $78,150 after Treasury Secretary Scott Bessent moved to support long-dated bonds, reviving the debasement trade.

Macro analyst Lyn Alden told CNBC the bottom is in by almost every metric, saying the bull market is back in play as the Treasury and Fed move toward financial repression.

Spot Bitcoin ETFs pulled in $606.29 million on Aug. 20, led by BlackRock's IBIT with $502.99 million, the largest single-day inflow since May 1, according to SoSoValue. Weekly inflows crossed $1.6 billion, the strongest week of 2026. More than $4 billion in bearish crypto positions were liquidated over the past two days, including about $1 billion on Friday.

Traders on prediction platform Kalshi, however, see the rally stalling, pricing bitcoin to end 2026 near $75,000 to $77,000 — roughly flat to slightly below current levels — after pricing near $66,000 before Wednesday. The next test is overhead supply in the low $80,000 range, which Real Vision analyst Jamie Coutts flagged as the key level bitcoin must clear.

Treasury Support Reshapes the Liquidity Backdrop

The Treasury's decision to expand purchases of longer-dated government debt — a measure Bessent framed as easing a sell-off in the bond market — relieved pressure on risk assets and pushed the dollar lower. Coutts argued bitcoin is again functioning as the earliest signal for where liquidity is heading, with the move shifting a backdrop that was on the verge of turning negative.

The underlying debt supply problem has not been solved, Coutts said, which means more intervention is likely down the road. That backdrop is bullish for bitcoin as a hedge against currency debasement, Alden said.

Prediction Markets Temper the Rally

Kalshi contracts ask traders to place yes and no trades on whether bitcoin will trade within various $5,000 ranges at midnight on Jan. 1, 2027, resolved using price data from CF Benchmarks. Before Wednesday's rally, speculators saw year-end bitcoin most likely around $66,000. The latest forecast of roughly $75,000 to $77,000 would represent a slight decline from current levels.

The rally has also been powered by a White House event where President Donald Trump, crypto executives and regulators pushed Congress to approve the Clarity Act market structure proposal. CFTC Chairman Michael Selig has directed agency staff to prepare rules for crypto markets if lawmakers fail to reach an agreement.

Coutts noted this week's two-day move ranks as the fifth-largest since 2018 on a volatility-adjusted basis at 4.4 sigma, a reading that normal counter-trend rallies do not produce. After moves of this size, bitcoin has historically finished higher more than 70 percent of the time over the following 30 to 180 days. Bitcoin's market cap stood at $2.77 trillion with dominance near 57 percent, according to CryptoRank.

This article is for informational purposes only and does not constitute investment advice.