Bitcoin Soars to Three-Month High as Gold Prices Rise Amid Dollar Weakness

Bitcoin has surged to a three-month high, approaching $80,000 in value, while gold prices also rose. The sudden increase in both safe-haven assets and riskier assets has left many wondering why this is happening at the same time.

The catalyst for this surge was the U.S. Treasury's decision to expand its long-term Treasury repurchase program, which lowered long-term yields and injected liquidity into the market. However, this move also sent a signal that the dollar system is becoming increasingly vulnerable, making 'credit substitutes' outside of the dollar more valuable.

CoinAge founder Jack Guzman stated bluntly: 'Bitcoin has now been established as a form of depreciation trading. When governments intervene in the market, capital ultimately flows into assets like Bitcoin.'

The Treasury's move was followed by new sanctions against Iran, which further fueled the surge in Bitcoin and gold prices. The sanctions list included digital assets for the first time, leading investors to view Bitcoin as a hedge against dollar depreciation.

Institutional money is also flowing into the market, with US spot Bitcoin ETFs recording a net inflow of $1.9 billion last week, marking the largest weekly inflow in 10 months. The total crypto ETF inflows for the week reached $2.6 billion, and the ETF asset size expanded to $96.1 billion, a weekly increase of 25.4%.

However, some analysts are warning that this rally may not be sustainable. Bitcoin has entered an overbought zone, and short positions were liquidated in two days, exceeding $3.1 billion, with Bitcoin alone reaching $1.44 billion in a single day.