Bitcoin posts record $14,264 weekly gain as Treasury buyback fuels rally

Bitcoin gained $14,264 to close the week at $77,387, a 22.7 percent jump — the largest dollar-denominated weekly gain in the asset's history.

Matt Cole, Chairman and CEO of Strive, said the next bitcoin cycle "will be the strongest we have ever seen," citing the asset's comparative performance against both the dollar and gold.

The rally followed the U.S. Treasury Department's announcement that it will at least double the maximum size of liquidity-support buybacks for longer-dated government securities, from $2 billion to at least $4 billion per operation starting Sept. 9. Spot bitcoin ETFs recorded $1.92 billion in net inflows for the trading week ended Aug. 21, the largest since October 2025, according to SoSoValue. The Crypto Fear & Greed Index stands at 78, the highest since December 2024.

The bitcoin-to-gold ratio sits at 16.73 ounces of gold per bitcoin, the highest since May, according to Longtermtrends. Analysts see $80,000 as the next key level, with $85,000-$90,000 possible if ETF inflows and macro liquidity remain supportive.

Scarcity trade drives bitcoin-gold ratio to 16.73

"The growing hunt for scarcity in an AI-driven world of abundance both point toward a powerful structural tailwind for scarce assets," Cole wrote on X, adding that this force will drive more capital toward scarce monetary assets such as gold, silver, and bitcoin.

"What makes this week particularly interesting is that bitcoin has now broken out against both the dollar and gold. The breakout has been explosive," Cole said. "Relative performance within that trade will help determine where incremental capital and liquidity flow. When bitcoin is the fastest horse, it will attract a disproportionate share of that capital."

The Strive CEO said these structural forces have left him more bullish on bitcoin today than ever before, adding that while a short-term pullback is likely, buyers will step in aggressively to buy the dip.

ETF inflows hit $1.92B as short covering amplifies move

Other analysts predict the current upward momentum will likely continue in the near future.

"The rally will continue in the short term, fueled by the short renewed ETF inflows, and improving macro liquidity," said Dominick John, analyst at Zeus Research. "With the CLARITY Act potentially advancing in September, institutional confidence could strengthen further, but some mid-term consolidation is likely before the next leg higher."

BTC Markets Crypto Analyst Rachael Lucas told The Block that it is important to understand what is driving the gains of such historic magnitude.

"Momentum this sharp is often driven by a mix of short covering, spot demand and derivatives positioning rather than a single catalyst," Lucas said. "The key thing to watch isn't the headline number; it's whether spot volume and ETF inflows are confirming the move or whether it's being amplified by leverage."

Lucas noted that spot-driven rallies offer stronger structural support for another leg up, whereas leverage-heavy moves leave the market vulnerable to a sharp unwind. Investors should watch spot bitcoin ETF flow data, which tends to lag, as it will show whether institutional demand is in line with market sentiment. Monitoring derivatives positioning, funding rates and open interest will show how much leverage has built into this move.

"Overheated funding rates and elevated open interest after a move this size are often an early warning of a leverage-driven pullback," Lucas added. "Broader macro risk, particularly any hawkish repricing in rate expectations or USD strength, could also cap enthusiasm."

Lucas, however, noted that a fair amount of profit-taking and volatility is a normal part of price discovery, and should not be interpreted as a bearish signal in itself.

"The main target is to reclaim $80,000 and see how the market responds. If the breakout holds, I'd look toward $85,000-$90,000, with $100,000 possible if ETF inflows and macro liquidity remain supportive," John of Zeus said.

Bitcoin traded near $76,600 on Aug. 23 after reaching $79,500 two days earlier, according to market data. The move from approximately $62,679 on Aug. 17 to $79,500 on Aug. 21 represented a gain of nearly 27 percent from the weekly low. Forced short covering helped drive the early part of the move, with traders holding leveraged bearish positions forced to buy BTC when prices crossed their liquidation levels.

Spot bitcoin ETFs recorded $606 million in net inflows on Aug. 20, following approximately $517 million the previous day, according to SoSoValue data. The five-session inflow total reached about $1.92 billion, providing evidence of spot demand alongside forced derivatives buying.

This article is for informational purposes only and does not constitute investment advice.