08/25 update below. This post was originally published on August 24
Bitcoin and crypto prices have rocketed over the last week, lifting the combined market by around $500 billion as “panic” spread like wildfire through markets.
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The bitcoin price has come within touching distance of $80,000 for the first time since late May, pushed on by one legendary billioniare investor naming bitcoin among his trade picks.
Now, as BlackRock reveals a surprise bitcoin flip, Treasury secretary Scott Bessent could be about to deliver a fresh, $1 trillion boost to the bitcoin price.
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U.S. Treasury secretary Scott Bessent could be about to unleash a $1 trillion worth of firepower on the bond market, potentially sending the bitcoin price sharply higher.
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The Treasury could use its near $1 trillion General Account to help fund bond purchases, according to a CNBC report, citing anonymous sources.
“The Treasury’s intention to bring Treasury yields under control has revived the ‘debasement trade’. Eroding confidence in bonds and currencies driven by the policies of their issuing authorities is leading to capital flight from debt and currency markets to other markets,” Alex Kuptsikevich, FxPro’s chief market analyst, said in emailed comments.
“Assets associated with decentralised finance, namely gold and bitcoin, are proving particularly popular.”
08/25 update: The bitcoin price has topped $80,000 per bitcoin for the first time since May, surging as U.S. Treasury secretary Scott Bessent makes a fresh attempt to bring soaring bond yields under control.
Bessent “will do whatever it takes to ‘put the fear of God’ into the bond vigilantes, shorting the long end of the curve in an attempt to drive the 10 year yield to 5%,” Fox Business correspondent Charles Gasparino posted to X, citing anonymous Wall Street executives.
Meanwhile, Bessent’s attempt to calm the bond markets and lower the cost of borrowing for the U.S. has been sharply criticized by his former mentor.
The billionaire investor Stanley Druckenmiller, who worked with Bessent at George Soros’s fund management company in the 1990s and was an architect of the fund’s $1 billion bet against the British pound, has warned against trying to suppress U.S. bond yields.
Writing in the Wall Street Journal, Druckenmiller argued that the U.S. should “let the bond market speak”, adding that “governments defending prices against fundamentals always lose. The only variable is how much they spend before conceding.”
Druckenmiller, who earlier this year predicted that the U.S. dollar won’t be the world’s reserve currency in 50 years due to the country’s spiraling, $40 trillion debt pile, possibly replaced by bitcoin or crypto, said the $1.8 trillion deficit needs to be addressed as it’s “the only thing that durably lowers long-term” bond yields.
“Reform entitlements gradually and honestly, through means testing, indexing changes, eligibility adjustments phased in over decades—so that the burden is shared across generations instead of dumped on the youngest,” Druckenmiller, the chairman and chief executive of Duquesne Family Office LLC, wrote.
Bitcoin and crypto traders have, however, cheered Bessent’s intervention in the market, taking it as a sign the Trump administration will pull out all the stops to bend the market to its will.
“Whether Bessent pumps fast or slow, bitcoin will continue its rally,” crypto trader Arthur Hayes wrote in a blog post.
“Volatility will increase, so just because the chart appears unidirectional upwards doesn’t mean there won’t be savage mini-corrections. Therefore, unless you are a full-time trader, don’t use leverage. Buy bitcoin or your favorite sh*tcoin, and sit tight, and let Bessent cook.”
Last week, Bessent gave the bitcoin price a shot in the arm when he said he’s “going to increase the size of the [bond] buyback,” adding that it “could be more than the $4 billion per issue.”
Bitcoin rallied more than 20%, buoyed by growing fears that the Trump administration could trigger a debt crisis as soon as next year as the $40 trillion debt pile spirals out of control.
“We have a big toolkit, so we’ll see,” Bessent said last week.
Bitcoin and crypto traders are feeling increasingly upbeat, with 10x Research analysts declaring bitcoin’s bull market “officially” here.
“We have consistently pointed out that bitcoin would most likely confirm its cycle low in either August or September, with August looking increasingly likely,” 10x Research analysts led by Markus Thielen wrote in an emailed note, adding that the latest bitcoin price rally has awakened the “animal spirits” of the market.
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The bitcoin price has surged over the last week, with traders betting the bitcoin price rally could be just getting started.
Forbes Digital Assets
“The rally in gold prices reached a tipping point, where ‘symbolic’ announcements, like the Treasury shifting some longer-dated bonds into shorter-dated ones and increasing the size from $2 billion to $4 billion, created an outsized ‘QE is back’ through some form of operation twist vibe.”
Meanwhile, other analysts have pointed to bitcoin’s strong performance against gold over the last week.
“Bitcoin priced in gold is reinforcing my view that the next bitcoin cycle will be the strongest we have ever seen,” Matt Cole, the chief executive of bitcoin treasury company Strive, posted to X, adding, “you’re not bullish enough.”
The bitcoin/gold ratio is an “important signal: within that expanding scarcity trade, bitcoin may be beginning to reassert its relative leadership and reclaim the title of fastest horse.”