Bitcoin climbed above $81,000 on Tuesday as gold reached a three-month high, extending a synchronized rally driven by a weaker US dollar, shifting Treasury yields and renewed concerns about the purchasing power of fiat currencies.
BTC traded as high as $81,237.94 before easing toward $80,300, according to Reuters. The cryptocurrency has gained about 28% in August and is heading for its strongest monthly advance since November 2024. The move extends the recent Bitcoin rally that accelerated after changes to the US Treasury's bond-buyback program.
Treasury Buybacks Revive the Debasement Trade
The catalyst extends beyond crypto. The US Treasury said it will increase liquidity-support purchases of longer-dated government securities beginning Sept. 9, with the maximum size of individual operations rising from $2 billion to at least $4 billion. The official Treasury plan is intended to improve liquidity in the 10- to 30-year segment of the market.
Investors responded by selling dollars and moving into assets viewed as relatively scarce. Bitcoin benefited alongside bullion, reviving the so-called debasement trade: the idea that fiscal pressure and policy intervention can weaken confidence in government currencies and push capital toward alternative stores of value.
That backdrop has reinforced Bitcoin's scarcity narrative. Unlike fiat currencies, its issuance follows a fixed schedule, with mining rewards periodically reduced through the halving and total supply capped at 21 million coins.
Institutional demand has added another layer. US spot Bitcoin ETFs attracted roughly $1.9 billion during the recent breakout week, while more than $4 billion of bearish crypto positions were liquidated as prices rose, forcing short sellers to buy into the rally.
Gold Approaches a Historic Monthly Gain
Gold has been moving for many of the same reasons. Spot bullion traded around $4,677 per ounce Tuesday, while futures approached $4,720. The metal's August advance is on course to become its strongest monthly performance since September 1999.
The latest gold outlook also puts the $4,700 area in focus as markets prepare for Federal Reserve Chair Kevin Warsh's Jackson Hole remarks.
Demand is not coming solely from private investors. Central banks bought a record 289 metric tons of gold in the second quarter, worth an estimated $45 billion, while 45% of reserve managers surveyed by the World Gold Council said they expect to increase holdings over the next year.
The next test comes from monetary policy. A more hawkish Fed message could strengthen yields and the dollar, pressuring both assets. A softer stance would leave the macro conditions behind the August rally largely intact.
