Investing.com– jumped to an over three-month high on Tuesday as growing uncertainty over U.S. fiscal health weighed on the dollar and spurred extended flows into cryptocurrencies.
The world’s largest crypto rose 2% to $79,119.8 by 05:55 ET (09:55 GMT), briefly hitting a three-month high of $81,300.0.
Tuesday’s gains saw Bitcoin slated to rise for eight of the past nine sessions, as the crypto rebounded sharply over the past week. The crypto also benefited from short-covering after its latest rebound liquidated a large number of short positions.
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Bitcoin surges after U.S. Treasury bond buys spur debasement fears
Bitcoin’s latest rally was fueled chiefly by growing anxiety over U.S. fiscal health and the long-term outlook for the dollar.
Said anxiety was triggered last week by the U.S. Treasury unveiled plans to essentially double its pace of bond buybacks to help cap a surge in yields.
The move spurred concerns that the dollar may bear the brunt of the Treasury’s intervention in bond markets, sparking the so-called “debasement trade.”
“The Treasury’s buyback announcement has shifted the market narrative from higher yields to USD debasement – fuelling a weaker USD, stronger and higher breakevens. While QE comparisons are overdone, rising policy uncertainty and questions around Fed independence are weighing on the USD,” OCBC analysts said in a note.
This in turn saw investors pile into gold and cryptos– assets seen as mostly shielded from ructions in the bond market.
Bitcoin in particular benefited greatly from this notion, with the crypto’s dismal year-to-date performance also drawing in bargain buyers.
Bitcoin rebound spurs $457 mln in long liquidations
Data from Coinglass showed Bitcoin’s rebound liquidated more than $457 million in short positions over the past 24 hours.
The trend spilled over from last week, where billions in Bitcoin short positions were wiped out by the crypto’s abrupt rebound.
Other cryptos also saw major liquidations, with Coinglass data showing $112.3 million in short positions being liquidated in the past 24 hours.
Crypto price today: altcoins rangebound after recent gains
Broader crypto prices moved largely sideways on Tuesday after clocking strong gains in recent sessions.
World no.2 crypto Ether added 0.5% to $2,473.0, while XRP traded flat after recent gains.
Solana surged 5.3%, Cardano slipped 0.6%, and BNB remained little changed.
Among memecoins, Dogecoin and $TRUMP fell about 1% each.
Vahid Karaahmetovic contributed to this report.