Bitcoin Rises Above Crypto Market as US Treasury Boosts Bond Purchases
The Bitcoin market has been on a tear, surpassing the rest of the crypto market in recent days. The price of Bitcoin has climbed to nearly $79,000, with a gain of around 24% over the past week, and is heading towards its best performance since 2023.
Traditionally, altcoins, the remainder of the cryptocurrency market excluding Bitcoin, are considered the most volatile assets in trading, fluctuating more strongly than Bitcoin in both directions. However, this week was different; while the overall market grew, it did not keep pace with Bitcoin's surge.
The Ethereum token led the pack of altcoins, rising by around 30% over the same period to above $2,500. Nevertheless, the Total3 index, which excludes both Bitcoin and Ethereum to isolate the rest of the market, has cooled off after an initial explosion and is currently around $753 billion, down from the previous week despite Bitcoin's approach towards $80,000.
A similar story unfolded for the Total2 index, which monitors the entire altcoin market. It jumped by over 24% between August 19th and 22nd as the initial rally spread beyond Bitcoin, pushing it back above $1 trillion. However, since then, it has given back some of its gains, trading near $1.05 trillion and falling in the last two days while Bitcoin continued to climb.
This pattern is more clearly visible in a metric called Bitcoin dominance, the participation of Bitcoin in the overall cryptocurrency market. If altcoins were truly outperforming, dominance would have fallen as money flowed into smaller currencies; instead, it rose to around 61% this week before correcting to approximately 59%, near its highest level for the year.
The CoinMarketCap's Altcoin Season Index corroborates this trend. It tracks how many of the top 100 coins surpass Bitcoin's price over the past 90 days on a scale where readings above 75 signal an altcoin season and values close to 25 indicate a Bitcoin season. With 46, most altcoins are still lagging behind in this race.
The surge is attributed to last Wednesday's announcement by the US Treasury that it would double its purchases of long-term bonds, government debt aimed at boosting demand and reducing borrowing costs, from $2 billion to $4 billion per operation starting September 9th. This move weakened the dollar and propelled investors towards Bitcoin as a hedge against inflation, similar to how gold has reached record highs this year.
US President Donald Trump added pressure two days later by meeting with crypto executives at the White House and urging Congress to pass the Clarity Act, a bill that would define which US regulator oversees what types of cryptocurrency assets.