Bitcoin tops US$80,000 as bullish mood returns to crypto market
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Bitcoin is back in favour after the US said it will step up its bond repurchases in a bid to bring long-term yields lower.
PHOTO: REUTERS
- Bitcoin surged above US$80,000 driven by US Treasury's bond repurchase plan and renewed investor optimism, marking its biggest weekly gain in three years.
- Institutional demand grew strongly with US-listed Bitcoin ETFs seeing the highest inflows in 10 months, tightening available Bitcoin supply and pushing prices up.
- Despite the rally, scepticism remains about its sustainability, as some view it as a short squeeze; miners may sell to reduce risks if prices rise further.
AI generated
Bitcoin climbed above US$80,000 for the first time since mid-May, as optimism returns to the beaten-down crypto market amid a confluence of bullish signals that forced the liquidation of billions in leveraged bets.
The original cryptocurrency rose as much as 2.9 per cent to US$81,257 on Aug 25, a level last seen on May 15, and was trading around US$79,800 at 10.40am in London.
Bitcoin is back in favour as chatter about the debasement trade was renewed by US Treasury Secretary Scott Bessent’s announcement last week that the US will step up its bond repurchases in a bid to bring long-term yields lower, sparking a new round of dollar selling.
Sceptics viewed the plan as further evidence that the Trump administration is not yet ready to do the hard work of reducing the budget deficit.
Bitcoin was originally created as way to escape fiat currency debasement and inflation driven by central bank money creation.
It rallied 23 per cent in the seven days through Aug 23, the biggest weekly jump in about three years, as Bessent’s bond-buying plan bolstered digital assets.
The price of gold, another beneficiary of the debasement trade, also advanced.
“The macro backdrop turned more supportive after the Treasury’s expanded long-dated buyback plan helped weaken the dollar and revive the ‘debasement trade’ across Bitcoin and gold,” said Lacie Zhang, a research analyst at Bitget Wallet.
Bitcoin is now approaching its 50-week moving average of roughly US$81,000, a level seen by technical traders as signalling that the rally has legs. It has traded below that threshold since November 2025.
“A close above this WMA (weighted moving average) level would be further constructive on a continuing bull rally,” said Rajiv Sawhney, head of international portfolio management at Wave Digital Assets.
The weighted moving average measures trend direction by giving more importance to recent data to better capture short-term market trends.
Institutional appetite has also returned.
Spot Bitcoin exchange-traded funds (ETF) had their strongest weekly inflow in 10 months last week as the token surged.
The 13 US-listed funds drew in a net US$1.92 billion (S$2.4 billion), the most since early October 2025, according to data compiled by Bloomberg.
They recorded a further net inflow of US$337 million on Aug 25.
That added demand has collided with scant supply of Bitcoin that is available to trade to create upward pressure on prices.
Roughly 60 per cent of Bitcoin in circulation has not moved for more than a year, according to Cici Lu McCalman, founder of Venn Link Partners.
“A lot of Bitcoin effectively isn’t available to trade,” she said. “So when ETF demand suddenly accelerates, the marginal available supply can be quite tight.”
The crypto market received an added boost the day of Bessent’s announcement with a meeting between US President Donald Trump and industry leaders, which revived optimism around the administration’s commitment to crypto.
Legislative momentum had slowed recently after the Clarity Act, a market structure bill, failed to make it to a vote before the Senate’s August recess.
Trump urged the chamber to pass the bill, and it is expected to be taken up again in mid-September.
The subsequent surge in Bitcoin’s price caught many traders off guard. About US$7.2 billion in leveraged bearish bets across all crypto-assets were liquidated last week, according to Coinglass data.
Crypto traders have been hunting for a market bottom for months. Bitcoin has been falling for much of 2026, following a selloff in October 2025 that came just after the token hit its all-time high.
Still, scepticism remains. Some analysts have pointed to the short squeeze as the main driver of rising prices, raising questions about the sustainability of investor demand.
One group looking to take profit now could be Bitcoin miners, who McCalman said have been “have been under severe financial pressure”.
The average cost to mine one Bitcoin was just under US$80,000 at the end of 2025, according to CoinShares.
“A move higher could prompt supply to sell from this cohort looking to monetise and de-risk their Bitcoin exposure,” Sawhney said.
While Bitcoin’s breakout “shows some characteristics of an early bull market” it “should not yet be treated as a confirmed trend,” said Bitfire Research Director Allen Ding.
“If institutional participation, regulatory progress and capital rotation continue to reinforce one another, the current move could mark more than a short squeeze – it could be the beginning of a new market cycle.” BLOOMBERG
