Bitcoin and gold surge as Bessent’s bond market intervention weighs on dollar

Bitcoin is on course for its best week in more than three years while gold is heading for its biggest monthly gain this century, amid investor fears that United States Treasury secretary Scott Bessent’s intervention in the bond market will continue to weigh on the dollar .

The price of bitcoin jumped nearly seven per cent on Friday and is up 23 per cent this week to around $77,380, the cryptocurrency’s highest level since May. Gold gained 1.5 per cent on Friday to about US$4,585 a troy ounce and is up more than 13 per cent in August, putting it on track for its biggest monthly gain since 1999.

Traders said both assets were rallying following the U.S. Treasury’s announcement on Wednesday that it would “at least double” its purchases of long-term government debt, a move that has slightly pushed down the yield on 30-year Treasury bonds but has also weakened the dollar amid concerns over the greenback’s purchasing power.

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Bessent’s move has “resulted in a strong boost to debasement-trade assets, particularly gold and bitcoin”, said one commodities trader.

The U.S. dollar fell sharply after Wednesday’s announcement and is now down around 1 per cent against a basket of currencies since Tuesday.

Mohit Kumar, chief European economist at Jefferies, said gold and cryptocurrencies had experienced a “massive performance” since Bessent’s announcement. “[This] supports the weaker dollar view,” he said.

The debasement trade — in which traders buy assets they expect will protect them from a weakening of the dollar and other fiat currencies — took a significant hit after the U.S. launched its war on Iran earlier this year, triggering a rise in inflation that pushed up short-term U.S. Treasury yields, helping to strengthen the dollar.

“Everyone liked debasement — the Iran war threw a spanner in the works but now we’re back to the debasement theme,” the trader said.