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Bitcoin rose in price by about a quarter over seven days, while gold set new records and the dollar weakened. This has revived so-called «deflation trading"—a strategy of buying scarce assets to hedge against inflation and the loss of purchasing power of fiat currencies.
The catalyst for the breakout was the U.S. Treasury Department’s announcement that it would expand its program to buy back long-term government bonds—the department promised to at least double the planned volume of such transactions. Following this, Bitcoin broke out of its multi-week trading range of $ 62,000-$ 67,000 and rose above $ 77,000 on Friday. Gold, meanwhile, reached $ 4,661 per ounce, according to the CME Group.
«Bitcoin's 23% rally, alongside gold, amid a weak dollar and rising Treasury yields reflects a subtle shift in institutional sentiment,» — commented Bitget Wallet researcher Lacy Zhang in a conversation with Decrypt. According to her, the unusual combination of high bond yields with the rise of Bitcoin and gold points to growing concerns about the U.S. fiscal situation. «Bitcoin is increasingly sharing the narrative with gold as a digital hedge against the structural devaluation of fiat,» the analyst added.
Jake Kenniss, a senior researcher at Nansen, agrees that market movements align with concerns about debt and the dollar, but cautions against drawing definitive conclusions. «BTC and gold are rising simultaneously as the dollar weakens—this aligns with the classic ‘safe-haven' trade amid concerns about fiscal credibility. But a weak dollar amid rising yields could also reflect a rising term premium, inflationary uncertainty, or a shift in growth forecasts—rather than a pure loss of confidence in Treasuries. «Therefore, the correlation is still just a hint, not proof,» he explained.
Positive regulatory signals from Washington provided additional support for the market. President Donald Trump called on Congress to pass a «fair version» of the Clarity Act, and CFTC Chairman Michael Selig announced that the agency is drafting rules to structure the cryptocurrency market in case the bill stalls.
The break above the $ 67,000 level triggered a short squeeze: traders betting on a decline were forced to close their positions urgently. According to CoinGlass, more than $ 4 billion in short positions were liquidated during the rally.
However, analysts urge caution in drawing conclusions. Zhang emphasizes that distinguishing a genuine «vote against the dollar» from a liquidity-driven rally is possible only by examining the dynamics of real yields and derivatives. Kenniss, for his part, notes: genuine trading driven by distrust in the government would look like sustained growth in Bitcoin and gold alongside prolonged weakness in the dollar and underperformance of long-term bonds—not simply a synchronized movement with other risky assets.