Bitcoin has gained 28% in August as a weaker dollar, US Treasury bond moves and renewed crypto optimism push prices higher
Bitcoin surged past $80,000 on Tuesday to hit its highest level in more than three months, extending a sharp August rally as a weaker US dollar and moves by the US Treasury to support the bond market revived demand for digital and other alternative assets.
Bitcoin, the world’s largest cryptocurrency, climbed to $81,237.94 during Asian trading hours, its highest level since mid-May. It was last trading at around $80,323.24.
The latest move takes Bitcoin’s gain for August to about 28 per cent, putting the cryptocurrency on course for its biggest monthly rise since November 2024.
The rally has gained momentum following moves by US Treasury Secretary Scott Bessent to calm the government bond market. The Treasury last week unveiled plans to increase buybacks of longer-dated US government debt, a move aimed at limiting the rise in long-term Treasury yields.
The announcement has, however, added to pressure on the US dollar, prompting investors to look again at assets that can potentially protect against currency debasement.
Why the dollar matters for Bitcoin
The latest Bitcoin rally is closely linked to a broader shift in investor thinking around US monetary and fiscal policy.
The Treasury’s efforts to prevent long-term borrowing costs from rising too sharply have revived concerns that pressure could shift from the bond market to the currency market.
This has fuelled what investors call the “debasement trade” — the movement into assets such as gold and Bitcoin when there are concerns that policy measures could weaken the purchasing power of fiat currencies.
More from BusinessBitcoin has increasingly been treated by investors as a potential hedge against monetary debasement because of its fixed supply and its independence from traditional central bank money.
Gold has also benefited from the weaker dollar and recently climbed to a three-month high.
Bitcoin gets support from Trump’s crypto push
Macroeconomic developments are not the only factor behind the Bitcoin rally.
US President Donald Trump last week called on Congress to pass legislation providing clearer definitions and rules for the cryptocurrency industry.
Bitcoin has gained about 16 per cent since Trump’s call, adding to optimism among crypto investors that the regulatory environment in the US could become more supportive.
The combination of clearer regulation, renewed investor appetite and a weaker dollar has helped push Bitcoin sharply higher after a period of subdued trading.
The cryptocurrency has also received support from renewed demand for spot Bitcoin exchange-traded funds and short liquidations.
The CoinSwitch Markets Desk said Bitcoin’s latest rebound had been supported by improving technical momentum, softer Treasury yields, a weaker dollar, renewed spot ETF demand and short liquidations.
However, the speed of the move has also pushed Bitcoin into overbought territory.
“That makes some consolidation likely,” CoinSwitch said, identifying the $74,000-$76,000 range as an important near-term support zone in case of a pullback.
The exchange also noted that the $80,000-$90,000 range has relatively thin historical trading activity, which could increase volatility as Bitcoin moves through the zone.
A sustained move above $83,000 would strengthen the bullish setup and could open the way towards $100,000, according to CoinSwitch.
Mudrex Head of Business Prateek Gupta also pointed to improving risk appetite in crypto markets. Bitcoin recently recorded its biggest weekly dollar gain on record, at more than $14.2 billion, while the Crypto Fear & Greed Index moved into “Extreme Greed” territory for the first time since November 2024.
The shift indicates that investors are becoming increasingly willing to take on risk.
But that also raises the possibility of sharper price swings if sentiment turns.
Gupta said Bitcoin needs to clear $80,000 decisively to confirm the breakout, while $77,000 remains a key support level.
Fed signals could decide next leg of rally
The next major test for Bitcoin could come from the US interest-rate outlook.
Markets are closely watching Federal Reserve Chair Kevin Warsh’s first Jackson Hole keynote, as well as upcoming US inflation data, for clues on the direction of monetary policy.
A softer inflation reading could push Treasury yields and the dollar lower, creating another favourable environment for Bitcoin and other risk assets.
A hotter-than-expected reading could have the opposite effect by strengthening expectations that interest rates will remain higher for longer. That could lift yields and the dollar, putting pressure on cryptocurrencies.
This makes the coming days particularly important for Bitcoin. The cryptocurrency has already delivered a powerful recovery, but investors now need to determine whether the move above $80,000 marks the beginning of a broader breakout or the peak of a short-term surge.
For now, the weaker dollar, Treasury’s bond-market strategy, expectations of clearer US crypto regulation and stronger risk appetite are all working in Bitcoin’s favour.
The key levels are clear. Holding above $80,000 would strengthen the bullish case, while a sustained move past $83,000 could bring $90,000 and eventually $95,000-$100,000 into focus. A reversal, meanwhile, could see Bitcoin test $77,000 and then the $74,000-$76,000 support zone.
With Bitcoin already up around 28 per cent this month, investors are now watching whether the world’s biggest cryptocurrency can turn its latest surge into a sustained break higher — or whether profit-taking will force a pause in one of its strongest rallies since late 2024.
(With inputs from agencies.)