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<a href="https://xpertsstudio.com/bitcoin-mining-shift-fuels-btc-price-watch-near-80k/” title=”Bitcoin Mining Shift Fuels BTC Price Watch Near $80K”>Bitcoin (COIN:BTCUSD) climbed above $80,000 on Tuesday, reaching its highest level in more than three months as mounting concerns over U.S. fiscal policy put pressure on the dollar and encouraged investors to move into cryptocurrencies and other alternative assets.
The world’s largest cryptocurrency rose 4.7% to $80,760.8 by 01:57 ET (05:57 GMT), after briefly reaching $81,220.4, its strongest level in three months.
The advance leaves Bitcoin on course to rise in eight of the past nine sessions, extending a sharp recovery over the previous week. The move has also been amplified by short-covering as higher prices forced traders betting against Bitcoin to close their positions.
Treasury Buyback Plans Drive ‘Debasement Trade’
The latest cryptocurrency rally has been closely linked to renewed concerns about the U.S. fiscal position and the potential longer-term implications for the dollar.
Sentiment shifted last week when the U.S. Treasury announced plans to roughly double the pace of its bond buybacks as part of efforts to contain the recent surge in yields.
The move raised concerns that greater Treasury intervention in debt markets could ultimately weigh on the dollar, encouraging investors to pursue the so-called “debasement trade.”
“The Treasury’s buyback announcement has shifted the market narrative from higher yields to USD debasement – fuelling a weaker USD, stronger gold and higher breakevens. While QE comparisons are overdone, rising policy uncertainty and questions around Fed independence are weighing on the USD,” OCBC analysts said in a note.
That backdrop has increased demand for assets such as gold and cryptocurrencies, which some investors regard as potential protection against instability in sovereign debt and currency markets.
Bitcoin has been a major beneficiary of the shift, with its previously weak year-to-date performance also attracting investors seeking exposure following the earlier decline.
Short Squeeze Adds Momentum to Bitcoin Rebound
Bitcoin’s rapid recovery has inflicted substantial losses on traders positioned for further declines.
Data from Coinglass showed that more than $457 million of Bitcoin short positions were liquidated during the previous 24 hours.
The latest short squeeze follows heavy liquidations last week, when Bitcoin’s abrupt recovery eliminated billions of dollars in bearish positions.
Similar activity was recorded elsewhere in the cryptocurrency market, with Coinglass reporting that $112.3 million of Ether short positions were liquidated over the same 24-hour period.
Source: uk.finance.yahoo.com