TLDR
- Gold price fell more than 8.5% from its $4,700 August peak, erasing the gains triggered by Treasury liquidity support.
- Bitcoin remained near $77,000 and still held about a 20% gain from the $64,000 level where its rally began.
- Scott Bessent’s Treasury buyback expansion initially pushed long-term yields lower and lifted gold, stocks, and crypto.
- Kevin Warsh’s hawkish Jackson Hole remarks reversed part of the move as bond yields recovered and markets priced tighter policy.
- Spot Bitcoin ETFs recently recorded more withdrawals than inflows, adding fresh pressure after the initial buying surge faded.
Financial markets turned volatile in mid-August after the US Treasury Department announced a larger liquidity-support program for long-dated government debt. The move pushed bond yields lower and lifted risk assets. The Gold price jumped quickly, while Bitcoin also broke higher after weeks of weak trading.
The shift came on August 19, when Treasury Secretary Scott Bessent said the government would double the maximum size of liquidity-support buybacks from $2 billion to $4 billion per operation. The decision followed a sharp rise in long-term yields.
Gold Price Reverses After August Surge
The 30-year Treasury yield had reached 5.34% on August 18, its highest level in 19 years. After the buyback announcement, the yield fell toward 5.2%. Gold moved from about $4,360 per ounce to $4,530 within hours.
The Gold price kept rising and reached $4,700 on August 25, its strongest level in more than three months. The rally later faded. Gold fell to about $4,300, leaving it more than 8.5% below its recent peak and under its starting level.
Bitcoin Price Holds Most of its Gains
Bitcoin followed the same early trend but kept more of its advance. The cryptocurrency had spent weeks below $65,000 before rising sharply to about $81,500 last week.
BTC later fell toward $77,000 after markets turned cautious again. Even after that decline, Bitcoin remained about 20% above the $64,000 area where the rally started. That performance separated it from gold, which erased its August gains.
Market sentiment changed after Federal Reserve Chairman Kevin Warsh spoke at Jackson Hole last Friday. His remarks were viewed as hawkish, raising expectations that interest rates could remain higher or increase.
Bond yields recovered after the speech, while gold and Bitcoin pulled back. The stronger rate outlook also reduced support for the debasement trade, which had benefited assets seen as stores of value during the earlier dollar weakness.
Bitcoin Faces New Pressure from ETF Flows
Bitcoin now faces pressure from both macro conditions and weaker demand through spot exchange-traded funds. Recent sessions have recorded more withdrawals than inflows, showing that the strong buying seen during the initial rally has slowed.
The next move may depend on bond yields, Federal Reserve policy signals, and ETF demand. Gold has already returned below its pre-rally level, while Bitcoin still holds a large part of its August advance. These factors remain central to short-term crypto market direction.
