Bitcoin surged above $80,000, reaching its highest price in more than three months as a weaker U.S. dollar helped reignite demand across the cryptocurrency market. BTC briefly climbed to $81,200 before trading around $80,300, representing a gain of roughly 16% over the previous week.

The rally has been driven largely by strong buying through U.S. spot Bitcoin ETFs and the rapid unwinding of short positions as Bitcoin continued to climb.

The U.S. Treasury recently expanded its longer-term bond buyback program, increasing planned purchases from $2 billion to $4 billion. Although the move does not directly add liquidity to the money supply, it could lower long-term financing costs and create conditions that markets perceive as similar to monetary easing.

The decision also revived the debasement trade, which involves buying scarce assets as protection against inflation, currency depreciation and persistent government deficits. With a hard cap of 21 million coins, Bitcoin remains a popular asset among investors seeking exposure to limited-supply alternatives.

The dollar weakened during Bitcoin’s advance, with the ICE U.S. Dollar Index declining 0.8% in the week after the Treasury announcement. Gold also strengthened, moving above its 200-day moving average of roughly $4,518 per ounce.

The rally was further amplified by short covering. Around $1.5 billion in Bitcoin short positions were liquidated, including approximately $700 million in just one minute. Traders closing bearish positions must repurchase Bitcoin, which can add substantial buying pressure during a rapid price increase.

Meanwhile, spot Bitcoin ETFs continue to provide an important channel for demand. These products allow investors to gain Bitcoin exposure through traditional brokerage platforms without directly buying or storing the cryptocurrency.

Treasury Move Fails to Keep Bond Yields Lower

The Treasury plans to launch the expanded purchases of longer-dated government bonds on September 9, aiming to strengthen liquidity in the Treasury market. However, the initial improvement in bond prices proved short-lived.

The 10-year Treasury yield climbed to 4.737%, while the 30-year yield rose to 5.276%, according to Dow Jones Market Data cited by MarketWatch. Both yields eventually moved back toward levels recorded before the buyback announcement.

Ian Lyngen, BMO’s head of U.S. rates strategy, said worries about de-dollarization, U.S. credit quality and a rising term premium continued to pressure the bond market. His assessment suggests that the Treasury’s larger buyback program has not significantly changed the forces keeping yields elevated.

Bitcoin could encounter its next major resistance between $95,000 and $100,000 if the current breakout holds. Still, the durability of the move remains uncertain.

The latest advance shows how ETF demand, shifting macroeconomic expectations and leveraged market positioning can combine to accelerate Bitcoin’s gains. With its fixed supply, Bitcoin also remains in focus alongside gold as investors consider the risks of inflation and a weaker U.S. dollar.