Bitcoin's latest rally is increasingly tied to a macroeconomic trade that once belonged mainly to gold: investors moving toward scarce assets when confidence in the US dollar and government debt weakens.
Bitcoin surged past USD 77,000 after the US Treasury expanded its long-duration bond-buyback program. Gold also rallied sharply, while the dollar fell to a three-month low against the euro. That combination is strengthening Bitcoin's case as a high-volatility hard asset.
The US Treasury doubled planned support for longer-dated government securities, raising individual buybacks from USD 2 billion to at least USD 4 billion.
The objective was to improve liquidity in the bond market, but investors also interpreted the move as evidence of growing stress around government borrowing. Reuters reported the dollar index near 98.80, while long-term Treasury yields remained elevated.
Bitcoin benefited as dollar weakness reduces the relative value of cash while making scarce alternative assets more attractive.
Bitcoin's monetary policy is fixed by protocol. Supply cannot exceed 21 million BTC, and the issuance of new coins declines through periodic halvings. That contrasts with government currencies, where monetary and fiscal policies can expand liquidity.
This does not make Bitcoin automatically rise whenever the dollar falls. Its price is also driven by leverage, sentiment, regulation and institutional flows. But concerns about currency debasement give investors another reason to consider BTC alongside gold.
The hard-asset thesis is becoming easier for traditional investors to express through spot Bitcoin exchange-traded funds (ETFs).
Last week's trading days saw net inflows of USD 1.918 billion in spot Bitcoin ETFs. The spot Bitcoin ETF with the highest net inflows last week was BlackRock's ETF IBIT, with weekly net inflows of USD 1.331 billion, followed by Fidelity's ETF FBTC, with weekly net inflows of USD 293 million.
The combination of ETF demand and short covering helped turn the rebound into a much larger move. Bitcoin subsequently gained more than 21% in a week.
Also, CryptoQuant analyst Darkfost wrote on Aug. 23 that USD 215 billion flowed into altcoins between Aug. 19 and Aug. 22, lifting ‘Total2’, a measure of the total cryptocurrency market capitalization excluding Bitcoin, above USD 1 trillion.
Bitcoin's scarcity does not give it gold's stability. BTC fell from around USD 95,000 in January to below USD 60,000 in June before recovering above USD 77,000. Gold also experienced a correction, but Bitcoin's swings were substantially larger. It is therefore better described as a high-beta scarce asset than a conventional haven.
Bitcoin's relationship with the dollar may become increasingly important as government debt and financing costs rise. If investors continue treating BTC as protection against monetary dilution, its market will depend not only on crypto adoption but also on confidence in traditional money itself.
Also Read: Bitcoin Vs Gold: Which is the Better Inflation Hedge for 2027?
1. Why is dollar weakness supporting Bitcoin?
A weaker US dollar can increase demand for scarce alternative assets by reducing the relative appeal of holding cash. Bitcoin benefits from this narrative as its supply is capped at 21 million BTC.
2. How much money flowed into Bitcoin ETFs last week?
Spot Bitcoin ETFs recorded about USD 1.918 billion in net inflows last week. BlackRock’s IBIT led with USD 1.331 billion, followed by Fidelity’s FBTC with USD 293 million.
3. Why is Bitcoin considered a hard asset?
Bitcoin has a fixed maximum supply of 21 million coins and a predetermined issuance schedule. This scarcity gives it characteristics that investors often compare with assets such as gold.
4. Is Bitcoin a safer haven than gold?
Bitcoin is much more volatile than gold and has experienced sharper drawdowns. It is therefore better viewed as a high-beta scarce asset rather than a conventional safe-haven asset.
5. Is the broader crypto market also recovering?
Yes. According to CryptoQuant analyst Darkfost, USD 215 billion flowed into altcoins between August 19 and August 22, pushing Total2, which excludes Bitcoin, above USD 1 trillion.
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