Bitcoin rises about 20% this week as Treasury bond support fuels debasement trade
Bitcoin (BTCUSD) is up about 20% this week, with analysts citing Treasury support for long-dated bonds, short liquidations and roughly $1 billion in spot ETF inflows in early August.
Bitcoin (CRYPTO: BTC) is up about 20% this week, and analysts argue that may be just the beginning.
They see the apex crypto as one of the beneficiaries of the Treasury’s support for long-dated bonds, which has revived the debasement trade narrative.
Why Debasement Trades Are Back in Focus Blockworks’ head of content Felix Jauvin said on Wednesday. that "the dovish signals keep firing," pointing to a shift in marginal macroeconomic policy towards the Treasury.
Jauvin argued that the U.S. government’s push to support the AI infrastructure buildout, much of which is being financed with debt, creates an incentive to prevent long-term Treasury yields from rising too far.
He also pointed to Treasury Secretary Scott Bessent ‘s support for the long end of the bond market, fueling the narrative for assets like gold and Bitcoin.
Why Treasury’s Move Mattered for BTC 21Shares highlighted a similar dynamic in a research note on Thursday.
The Treasury doubled its support for longer-dated government bonds in August, increasing its buyback program from $2 billion to $4 billion.
Unlike traditional quantitative easing, this move applied downward pressure on longer-term yields producing an easing-like effect for markets.
21Shares senior strategist Matt Mena argued that expectations of a weaker dollar helped drive investors toward scarce assets such as Bitcoin.
The Treasury isn’t directly expanding the money supply, but markets are pricing the policy as easier financial conditions.
For Bitcoin bulls, that strengthens the scarcity thesis.
As maximum supply remains fixed at 21 million coins, investors are attracted to seek protection against potential currency debasement.
The Treasury’s move strengthened Bitcoin’s structural investment case as a fixed-supply asset in a world of expanding money supply.
Liquidations, ETF Inflows Fuel Rally Roughly $1.5 billion in short positions were liquidated, including approximately $700 million within a single minute.
As Bitcoin moved higher, forced closures of bearish positions added further buying pressure and accelerated the rally.
But the move wasn’t driven entirely by liquidations, 21Shares noted.
U.S. spot Bitcoin ETFs attracted roughly $1 billion in net inflows during the first two weeks of August, suggesting regulated investment demand had already been building before the Treasury announcement.
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