The sharp increase in bitcoin in recent weeks has rekindled the market's discussion of a “depreciation of scarce assets against currencies”. According to external sources, against the backdrop of the weakening of the United States dollar, the synchronous high of gold, and the high long-term return on United States debt, some agencies have begun to read this pattern as a re-pricing of United States fiscal prospects, rather than simply a return to risk.

Bitcoin breaks through and pulls up.

In previous weeks, bitcoin had fluctuated between $62,000 and $67,000. Following the announcement by the United States Department of the Treasury to expand the buy-back of long-term national debt, prices broke through the zone and reached $77,000 last Friday. Meanwhile, CME data indicate that gold rose to $4661.

Bitget Wallet, a research analyst, Lacie Zhang, said to Decrypt that bitcoin and gold were rising at a time when the dollar was weak, reflecting changing institutional moods. In her view, while the rate of return on long-term United States debt remained high, the simultaneous flow of funds to Bitcoin and gold was an indication of rising market concerns about the financial position of the United States.

United States dollar weakness-led hard asset transactions

Nansen's senior research analyst, Jake Kennis, also argued that Bitcoin's rise in parallel with gold, the weakening of the United States dollar, does fit the “hard asset hedge” logic, i.e., investors' fears of debt expansion, the decline in the purchasing power of the dollar, and fiscal credit constraints.

At the same time, however, he pointed out that such relevance did not at present provide a direct proof that the market had developed a clear “forecast dollar” transaction. The weakening of the United States dollar and high long-term rates of return may also result from rising term premiums, unstable inflation expectations or changes in growth expectations, without necessarily implying a loss of investor confidence in United States Treasury debt.

  • Bitcoin and gold remain strong.
  • The dollar continues to weaken and long-term risk premiums rise.
  • Long-term American debt performance continues to lag behind.

Zooming in.

In addition to the macro narratives, the market structure itself pushed up the boom. Following the increase of $67,000 in bitcoin, the empty space was forced to return to the positions and further magnify the upwards. The CoinGlass data show that over $4 billion of the round was cleared.

In addition, last week's encrypted and friendly statement in Washington raised emotions. Trump called for Congress to adopt a “fairer version” of Clarity Act, and Michael Selig, Chairman of the United States Commission for Commodity Futures Trading, said that if the relevant legislation was blocked, regulators would be prepared to encrypt market structure rules.

Additional information:The analysts believe that, in order to ascertain whether the increase in this round really points to the “observed dollar”, it is also necessary to continue to observe real interest rates, derivative warehouse positions, spot ETF funds flows in Bitcoin and the sustainability of the chain increase.