Bitcoin heads for best week in three years; gold set for biggest monthly gain in century

Bitcoin and gold prices have continued to surge this week amid heightened fears among investors that the U.S. dollar could further weaken following U.S. Treasury Secretary Scott Bessent’s bond market intervention.

With this surge, Bitcoin is heading for its strongest weekly performance in three years, rising by seven per cent on Friday and 23 per cent this week to $77,380. Meanwhile, gold, which is up 13 per cent in August, is heading for its biggest monthly gain in a century. 

This follows Mr Bessent’s announcement that the U.S. government would “at least double” its purchases of long-term debt, pushing down the yield on 30-year Treasury bonds and weakening the dollar.

The currency fell sharply after the announcement and is now down nearly one per cent against other currencies.

Gold and cryptocurrencies have seen a “massive performance” since Mr Bessent’s announcement, said Mohit Kumar, chief European economist at Jefferies. “[This] supports the weaker dollar view,” he said, according to the Financial Times. 

Following the U.S. launch of its war against Iran in February, the debasement trade weakened as investors feared that the conflict would trigger an inflation surge, pushing up short-term U.S. Treasury yields and strengthening the dollar. 
“Being erratic and unpredictable generally translates into higher premiums, which partly explains why the dollar is depreciating,” said Eoin Walsh, portfolio manager at TwentyFour Asset Management. 

Meanwhile, Chris Turner, head of global markets research at ING, believes Mr Bessent’s intervention could be an attempt to stabilise the bond market.
“Some commentators are suggesting that [the weaker dollar demonstrates] a loss of credibility in U.S. policymaking,” he said. “But I think . . . what we’re seeing is the U.S. Treasury secretary taking a strong interest in the long end of the treasury market.” 

For months, crypto prices had been gradually declining before the sharp surge this week. Traders who had bet that Bitcoin’s price would fall were forced to close their positions as the cryptocurrency rose, further driving up its price.