Bitcoin has shown a steep upward trend, approaching the $80,000 level. Analysts say the rally is the result not only of factors within the virtual asset market, but also of liquidity changes originating in the US long-term Treasury market combined with a weaker dollar.

Expanded US Treasury Buybacks... Capital Shifts to Alternative Assets Amid Dollar Weakness

The US Treasury announced on the 19th that, in order to improve liquidity in the long-term Treasury market, it would expand the scale of certain long-term bond buybacks from the existing $2 billion per operation to at least $4 billion, starting September 9. The targets include long-maturity nominal Treasury securities.

Immediately after the announcement, long-term Treasury yields fell and the dollar weakened, bringing changes to capital flows across financial markets. While the aim was to stabilize the bond market, the move reignited debate over America's fiscal burden and the possibility of currency depreciation.

As the dollar's value wavered, capital moved into assets classified as alternatives to currency depreciation, such as gold and Bitcoin. Bitcoin has risen roughly 23% this week, and gold prices have also shown strong gains.

ETF Inflows Resume... Institutional Buying Strengthens Another factor accelerating Bitcoin's rise was US spot Bitcoin exchange-traded funds (ETFs). US spot Bitcoin ETFs saw approximately $606 million in net inflows on Thursday alone, with cumulative net inflows from Monday through Thursday totaling around $1.6 billion. This indicates that buying, centered on institutional capital, is strengthening once again.

$4.3 Billion in Shorts Liquidated... 'Short Squeeze' Accelerates the Rally As the price rally gained momentum, a chain of short position liquidations occurred in the derivatives market. As Bitcoin touched the $79,000 range, more than $4.3 billion in cryptocurrency short positions were reportedly closed over the past few days. Forced liquidations of investors who had bet on declines led to additional buying, and the resulting 'short squeeze' is interpreted as having pushed prices higher.

Sustainability of the Rally Depends on the Dollar, US Rates, and ETF Inflows However, it is difficult to explain this rally solely by the Treasury's bond buybacks. Bond market anxiety has not been fully resolved, as long-term yields rose again after the buyback expansion. Structural problems remain, including America's massive fiscal deficit, national debt, and long-term Treasury supply burden.

Ultimately, whether Bitcoin can break through the $80,000 level and continue rising will likely hinge on the dollar's direction, US Treasury yields, and the persistence of spot ETF inflows. Given the sharp short-term price gains, the possibility of volatility expanding again due to position changes in the derivatives market cannot be ruled out.

[This article was written with AI assistance. Virtual assets are highly volatile investment assets that can incur significant losses in a short period. This article is not intended to recommend the purchase or sale of any specific virtual asset or to predict price increases; investment decisions and their consequences are the responsibility of the investor.]