Treasury Secretary Bessent Backs Long Bonds, Bitcoin Up 20% Weekly to Record High

Bitcoin rose about 20% this week, and analysts suggest this could be just the beginning.

They view the top crypto asset as one of the beneficiaries of the Treasury's support for long-term bonds, which has reignited the narrative of the currency debasement trade.

Why the Debasement Trade Is Back in Focus

"Accommodative signals keep being released," Blockworks content director Felix Jauvin said on Wednesday, pointing to a marginal shift in macroeconomic policy toward the Treasury.

Jauvin argued that the U.S. government's push for AI infrastructure buildout creates an incentive to prevent long-term Treasury yields from rising too high.

He also noted Treasury Secretary Scott Bessent's support for the long end of the bond market, which has fueled the narrative for assets like gold and bitcoin.

Impact of Treasury Moves on Bitcoin

21Shares highlighted similar dynamics in a research report on Thursday.

In August, the Treasury doubled its support for long-term government bonds, increasing its buyback program from $2 billion to $4 billion.

Unlike traditional quantitative easing, this move applies downward pressure on long-term yields, creating an easing-like effect for the market.

Matt Mena, senior strategist at 21Shares, argued that expectations of a weaker dollar are helping drive investors toward scarce assets like bitcoin.

The Treasury is not directly expanding the money supply, but the market prices this policy as looser financial conditions. For bitcoin bulls, this reinforces the scarcity thesis.

With a fixed maximum supply of 21 million coins, investors are drawn to seek protection against potential currency debasement.

The Treasury's moves strengthen bitcoin's structural investment case as a fixed-supply asset in a world of expanding money supply.

Liquidations and ETF Inflows Drive the Rally

Approximately $1.5 billion in short positions were liquidated, including about $700 million wiped out within a single minute.

As bitcoin rose, forced closures of bearish positions added further buying pressure, accelerating the rally.

But 21Shares noted the move was not entirely liquidation-driven.

U.S. spot bitcoin ETFs attracted roughly $1 billion in net inflows during the first two weeks of August, indicating regulated investment demand was already building ahead of the Treasury announcement.