Bitcoin Breaks $80K Barrier Amid Liquidity Support and Institutional Demand

Bitcoin has surged past $80,000 for the first time since mid-May, climbing more than 25% over the past seven days. This strong weekly rally is its strongest in over three years, according to CoinGecko data.

The price surge started after the US Treasury Department announced on August 19 that it would increase the maximum size of liquidity support buybacks for longer-dated nominal Treasury securities by at least twofold. Under this change, which takes effect on September 9, the maximum size of certain buyback operations will increase from $2 billion to at least $4 billion per operation.

The higher limits will remain in place through November 4, when the Treasury is due to hold its next quarterly refunding. Following the announcement, long-term Treasury yields initially fell as investors assessed the potential liquidity impact of larger government bond purchases. Concerns over US borrowing costs and fiscal deficits also weakened the dollar and increased investor interest in alternative assets, including Bitcoin and gold.

Institutional demand through US spot Bitcoin exchange-traded funds added another source of buying pressure as BTC moved higher. Data from SoSoValue showed that spot Bitcoin ETFs recorded $1.92 billion in net inflows between August 17 and August 21, their strongest weekly intake in around 10 months.

However, several indicators show that the move has become stretched following the rapid rise from the mid-$60,000 range. The 14-day Relative Strength Index has reached 83.63, well above the conventional overbought threshold of 70, leaving BTC vulnerable to a short-term pullback or consolidation.