Bitcoin has posted its strongest weekly performance since early 2023, driven by a combination of government bond market actions and a surge in institutional capital. The U.S. Treasury expanded its buyback program for long-term government debt, raising the per-operation ceiling from $2 billion to a minimum of $4 billion. This move led to a temporary dip in bond yields, which helped boost interest in riskier assets such as Bitcoin and gold.
Institutional investors poured over $92 billion into crypto-related products last week, the largest five-day inflow since October, according to ad-hoc-news.de. BlackRock’s iShares Bitcoin Trust (IBIT) attracted roughly $239 million in flows on a single day, accounting for about 77% of that day’s total crypto fund inflows. Bitcoin’s price approached $80,000 for the first time since May, with Ether also seeing a notable gain of 2% to reach around $2,470, according to a report from profitconfidential.com.
Crypto-related stocks also rose, with Strive gaining 8% and Strategy seeing a 2% increase. Ethereum-focused companies such as Bitmine and Sharplink posted gains of 5% and 4%, respectively. Market analysts are debating whether this rally marks a turning point for Bitcoin, which had been in a downtrend since October.
Jonathan Krinsky of BTIG noted that a similar pattern occurred in January 2023, when Bitcoin surged about 20% over three days before retreating. This week’s price movement was also linked to a sharp short squeeze, pushing Bitcoin up nearly 20% in three days. Ray Dalio, founder of Bridgewater Associates, warned that global economies may face a debt crisis in the next few years.
Dalio advised investors to include Bitcoin in their portfolios as a hedge against economic instability. The rally has also sparked discussion about whether Bitcoin could reach $80,000 by August, with Polymarket suggesting a 65% chance to that outcome. However, the probability of Bitcoin reaching $80,000 by August is 65%, and the probability of Bitcoin reaching $85,000 or $100,000 is much lower, at just 22% and 1%, respectively.
Regulatory developments are also influencing the market, with Senator Cynthia Lummis criticizing banks for blocking progress on the CLARITY Act. The White House is pushing for the CLARITY Act to pass by September 15, though its future remains uncertain. If the legislation fails, oversight may shift to agencies like the SEC, which has already proposed a 401-page framework for crypto securities.
The sudden price surge also led to a wave of liquidations, with more than 280,000 traders affected in one day. These liquidations were tied to a drop in Bitcoin’s price below $76,000 after briefly touching $79,461. The mining sector has also seen renewed activity, with the hash rate climbing over 20% in four days to $38.29 per petahash per second.
Despite the strong performance, experts caution that the path forward remains uncertain. Jordi Visser described Bitcoin as an ‘anti-rot’ hedge, pointing to its decade-long return of over 13,000%. He noted that Bitcoin’s performance outpaces even Nvidia, which is among the top-performing assets in recent years.
The sharp rise has been described as a statistical outlier, with some calling it a 4.4-sigma event. Investors are now watching closely for signs of continued momentum or a potential correction in the market.
IMAGE: Ray Dalio while giving a speech at the 10th anniversary celebration of charity Grameen America. Metropolitan Museum of Art, September 23 2017.. Photo: Grameen America / Wikimedia, taken 2017-09-23, CC BY 3.0