Wintermute: Bitcoin, XRP, Gold Benefited Last Week from "Currency Debasement Trade"

Cryptocurrencies and gold surged together last week while stocks fell, prompting quantitative trading firm Wintermute to call Bitcoin's best week since March 2024 a "currency debasement trade."

Wintermute's weekly market update on X analyzed the divergence between assets outside the fiscal system and those priced within it:

Asset Weekly Change

XRP +40%

Bitcoin +23.78%

Ethereum +31.48%

Gold +5.45%

S&P 500 -1.37%

Russell 2000 -1.68%

Nasdaq -2.41%

The Actual Trigger

According to the report, six weeks of compressed volatility had stacked a dense band of short liquidation levels just above Bitcoin's trading range.

When the U.S. Treasury announced it would at least double its long-dated bond buybacks to $4 billion per operation, Bitcoin broke through that ceiling, converting short positions into buyers.

According to CoinGlass data, a record $2.7 billion in shorts were liquidated during the rally from $63,000 to $79,000.

Meanwhile, BTC spot ETFs absorbed $1.92 billion this week, with BlackRock's IBIT taking in $1.33 billion, while ETH ETFs added $693 million, with daily net inflows rising from $31 million on Monday to $220 million on Thursday.

Wintermute noted the timing sequence was critical: a similar rally to these price levels in May lacked ETF buying support and ultimately failed, while this week's combined $2.6 billion in inflows provided the structural support that last breakout lacked.

Why Washington Matters

Four consecutive trading days of regulatory news added a third driver to the move, all ahead of the weekend White House crypto summit:

The SEC released its "Cryptocurrency Regulatory Proposal"

Donald Trump urged Congress to pass the "Clear Act"

Trump proposed a large-scale U.S. Bitcoin purchase

Regulators said they are exploring Hyperliquid's compliance path

Wintermute argued that the regulatory narrative is now advancing on its own timeline through the SEC and CFTC, independent of whether the Clear Act passes the restrictive procedural vote on September 15.

Wintermute turned constructive but placed the burden of proof on ETF inflows.

The firm said it would turn cautious if a week of negative Bitcoin ETF inflows coincides with prices closing back below $67,000, which would indicate the rally was leverage-driven without underlying structural buying support.