Bitcoin tops $81,000 as debasement trade revives on dollar weakness

Bitcoin rose 23% in seven days to $81,160 as Treasury buyback expansion weakened the dollar, reviving the debasement trade.

"Bitcoin's 23% rally alongside gold during a period of U.S. dollar softness and elevated Treasury yields reflects a subtle shift in institutional sentiment," Lacie Zhang, research analyst at Bitget Wallet, said.

The move followed the Treasury's announcement that it would at least double the size of its liquidity-support buyback operations, a step that pressured the dollar while lifting non-yielding assets. Gold climbed to $4,661, according to CME Group data. U.S. investors added nearly $2 billion to Bitcoin exchange-traded funds last week, the best inflow week since October, while more than $4 billion in short positions were liquidated as the price broke above $67,000, per CoinGlass.

The rally has pushed Bitcoin back toward levels not seen since January, though it remains well below the record $126,080 set in October before the largest liquidation event in crypto history. Analysts caution the move may reflect tactical positioning rather than a structural shift, with Fed Chair Kevin Warsh's hawkish Jackson Hole speech already triggering a 3% pullback on Friday.

Treasury Buybacks Dent the Dollar

The debasement trade — buying scarce assets to hedge against a currency losing value — dominated crypto commentary through 2025 before fading as Bitcoin declined from its October peak. The strategy has returned as the dollar weakens, with Bitcoin breaking out of a weeks-long $62,000-to-$67,000 range after the Treasury announcement.

Jake Kennis, senior research analyst at Nansen, said the moves are consistent with debt and dollar concerns but not conclusive. "BTC and gold rising together while the dollar weakens is consistent with debasement and fiscal-credibility concerns, i.e. the classic 'hard asset' hedge trade," Kennis said. "But a weaker dollar alongside elevated yields can also reflect higher term premium, inflation uncertainty, or changing growth expectations rather than a pure loss of faith in Treasuries."

Regulatory Hopes Add Fuel

Crypto-friendly developments in Washington have supported sentiment, with President Donald Trump urging Congress to pass a "fair version" of the Clarity Act. CFTC Chair Michael Selig said the agency was preparing crypto market structure rules in case the legislation stalls.

Zhang cautioned that the rally could still reflect short-term positioning rather than a lasting shift away from the dollar. "Distinguishing a true systemic 'vote against the dollar' from a liquidity-driven rally requires close observation of real yields and derivatives positioning," she said. "If real Treasury Inflation-Protected Securities yields remain elevated while futures open interest leads spot demand, the movement may reflect tactical positioning rather than a permanent structural retreat from fiat."

Bitcoin slipped below $78,000 on Saturday after the pullback from three-month highs, and shed more than 3% on Friday as the dollar surged on Warsh's hawkish remarks. The asset has become increasingly less volatile and so far has suffered its shallowest bear market, according to analysts, a sign of improving market structure as institutional access expands.

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