Bitcoin hit $81,000 as Bessent's move rattled the dollar

Bitcoin jumped above $81,000 on Tuesday, its best run in more than three years. It slipped back toward $79,000 by Wednesday morning. The spark wasn't anything crypto-specific. Treasury Secretary Scott Bessent moved to buy back long-term government bonds last week. Investors read that as a sign the government will keep leaning on a weaker dollar to manage its debt. Gold rallied right alongside bitcoin.

Traders call this the "debasement trade." It's the bet that a government borrowing its way out of debt ends up with a weaker currency. So investors pile into things a government can't just create more of — gold, and increasingly, bitcoin. It's not a new idea, but bitcoin's swings show how fragile the rally still is. It's up sharply from around $63,000 two weeks ago, then gave some of it back within a day. That volatility is why many economists still call bitcoin a speculative bet, not a real hedge like gold.

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Will the debasement trade have staying power, or fade the moment the Fed says something reassuring? Bitcoin's pullback within a day of its peak suggests plenty of traders are just riding a spike. They're not necessarily making a long-term bet on a weaker dollar. The real test comes if Bessent keeps up the bond buybacks. Each one so far has moved bitcoin more than any actual crypto news has.