Bitcoin Breaks $80,000, Hits 3-Month High as Currency Depreciation Trade Squeezes Shorts

Bitcoin has broken $80,000 for the first time since mid-May, reigniting bullish sentiment in the long-dormant cryptocurrency market and forcing billions of dollars in leveraged positions to be liquidated.

On Tuesday (25th), Bitcoin surged as much as 2.9% during Asia trading hours, hitting $81,257—the highest level since May 15. The previous week, Bitcoin had already rallied 23%, marking its strongest weekly gain in nearly three years. However, it still remains far below its all-time high of approximately $126,000 reached in October last year.

Market enthusiasm returned after U.S. Treasury Secretary Betts announced an expansion of long-term Treasury buybacks aimed at lowering long-term yields. This move reignited selling pressure on the U.S. dollar and revived discussions around the "currency depreciation trade," drawing investor interest back to Bitcoin. Critics argue that this plan further indicates the Trump administration is not yet ready to take tough measures to reduce budget deficits.

Bitcoin was originally designed to hedge against fiat currency devaluation and inflation caused by central banks expanding the money supply.

"Following the Treasury’s expanded long-term bond buyback program, the dollar weakened, reinvigorating the 'currency depreciation trade' in both Bitcoin and gold. The overall macroeconomic environment has also become more favorable," said Lacie Zhang, research analyst at Bitget Wallet.

As Bitcoin prices rose, spot Bitcoin ETFs recorded their strongest weekly inflow in 10 months. According to Bloomberg data, 13 U.S.-listed funds collectively attracted $1.92 billion in net inflows—the highest since early October last year. On August 20 alone, these funds pulled in $606.3 million, the largest single-day inflow in over three months.

On the same day Secretary Betts made the announcement, President Trump met with cryptocurrency industry leaders, further boosting market sentiment and renewing hopes for pro-crypto policies under his administration. Recently, legislative progress has slowed, as the market-structuring Clarity Act failed to reach a vote before the Senate’s August recess. Trump urged the Senate to pass the bill, which is expected to be reconsidered in mid-September.

Bitcoin’s subsequent sharp rally caught many traders off guard. Data from Coinglass shows that approximately $7.2 billion worth of leveraged short positions across the crypto market were liquidated last week.

For months, cryptocurrency traders have been searching for a market bottom. Bitcoin remained in a downtrend for most of 2026, following heavy selling shortly after its record high in October last year.

Nonetheless, market skepticism persists. Analysts point out that this price surge was primarily driven by short covering, suggesting that underlying buying demand may not be sustainable.