Bitcoin touches $80,000, but how long can the rally last? [Crypto360]

Bitcoin briefly broke through the $80,000 resistance level before retreating to around $78,000. Analysts say the recent surge was driven by a spreading "debasement trade" — bets on the erosion of fiat currency value amid concerns over US fiscal health — compounded by growing expectations around digital asset policy.

As of 3:26 p.m. Wednesday, Bitcoin was trading at $78,893, down 2.28 percent from 24 hours earlier, according to CoinMarketCap. Ethereum fell 2.18 percent to $2,456 over the same period, while XRP and Solana dropped 5.16 percent and 4.84 percent, respectively.

Bitcoin climbed as high as $80,951 on Tuesday before sliding back to the $78,000 range within a day. Still, compared with a week ago, Bitcoin is up 22.82 percent and Ethereum 28.60 percent. XRP and Hyperliquid (HYPE) surged 43.59 percent and 40.72 percent, respectively, over the same period.

Industry experts point to the spread of the debasement trade as the key driver of the rally. The strategy involves shifting investment into alternative assets such as gold and Bitcoin as a hedge against the declining value of fiat currencies.

In a report Tuesday, a researcher identified as Yang said the Bitcoin rebound reflected the simultaneous convergence of several forces: the Treasury's expansion of its buyback program, a weakening dollar reinforcing the debasement trade, expectations that the CLARITY Act would pass, and the unwinding of accumulated short positions.

The US Treasury had earlier doubled the per-session buyback size for 10- to 30-year government bonds, raising it from $2 billion to at least $4 billion. Immediately after the announcement, the 30-year Treasury yield fell roughly 9 basis points in a single day, but subsequently reversed much of that decline as fiscal concerns resurfaced.

While the expanded buyback program offered short-term relief to liquidity pressures in the bond market, buybacks alone cannot resolve the long-term supply burden on government bonds or ease upward pressure on interest rates — particularly as the federal government's debt approaches $40 trillion this year and annual interest payments have surpassed $1 trillion.

"As dollar weakness and fiscal health concerns converged, gold, silver and Bitcoin all rose together," Yang said. "Bitcoin, which had lagged behind gold and silver until recently, posted the sharpest rebound of the three."

Policy expectations also bolstered the rally. President Donald Trump renewed his call for passage of the CLARITY Act, while the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) moved to overhaul their own regulatory frameworks independently of the legislation, raising hopes that regulatory uncertainty would ease.

Some analysts caution, however, that it is too early to interpret the surge as a sign that Bitcoin has established itself as a structural debasement asset on par with gold. Gold benefits from price-insensitive, long-term buyers in the form of major central banks, whereas Bitcoin remains comparatively more dependent on risk appetite from ETFs, digital asset treasury companies and individual and institutional investors.

"For Bitcoin to cement its place as a leading debasement asset, it needs to expand its base of long-term buyers that are less sensitive to price and market cycles — beyond ETFs and digital asset treasury companies," Yang added.