Bitcoin Soars to $78K on US Treasury's Liquidity Injection

The price of Bitcoin has surged to nearly $78,000 on August 21 after a violent rally that saw it jump by around 18% in just two days and 24% over the week.

This sudden increase was not triggered by any major ETF announcements or adoption deals, but rather by a move from the US Treasury. The Treasury doubled its long-term bond buybacks to $4 billion per session, targeting the 10-, 20- and 30-year sectors after the 30-year yield spiked to nearly two-decade highs due to inflation and war-driven energy costs.

US Treasury Secretary Scott Bessent stated that he has a 'big toolkit' to address rising bond yields. This move is seen as the government stepping in to buy its own debt and inject liquidity, which Bitcoin bulls interpreted as a sign of more of this kind of action coming.

Gautam Chhugani, a strategist at Bernstein, noted that 'Bitcoin historically has had a positive reaction to liquidity expansion.' The Treasury's move is seen as a catalyst for the current price surge. Chhugani also predicted that either the CLARITY Act passing in the September session or accelerated SEC and CFTC rulemaking will unlock new markets and lead to further growth.

With Bitcoin now trading inside the $76,000 to $82,000 supply zone, holding above $75,000 is crucial for maintaining momentum. However, some experts caution that this price surge may be driven by liquidity rather than fundamentals.