Bitcoin (BTC) consolidated above $77,000 following Friday’s Wall Street open, while gold joined the cryptocurrency rally and climbed to 14-week highs, with analysts pointing to US government debt policy as the key driver behind gains across both asset classes.

Key points:

• Bitcoin and gold both hit their highest levels since May 15 against the US dollar.
• Analysts tie the strong performance firmly to US government debt policy, including record deficit spending and expanded Treasury buybacks.
• Polymarket odds of Bitcoin reaching $90,000 before 2027 stand at 48%.

Bitcoin and gold gains “should not come as a surprise”

Data from TradingView showed BTC/USD cooling after reaching its highest levels since May 15, still up nearly 6% on the day.

Gold echoed the move, touching multi-month highs of $4,632 per ounce, up 2.2% on the day at the time of writing. On a monthly basis, BTC/USD and XAU/USD were up 13% and 16%, respectively.

“What’s happening now in gold and crypto should not come as a surprise,” market commentary The Kobeissi Letter wrote in a response on X.

Kobeissi attributed the rapid gains in precious metals and crypto to a combination of inflation, deficit spending and US Treasury policy. Record government deficit spending, together with the Treasury Department’s pledge to at least double the size of certain debt buyback operations to $4 billion, helped drive the rally in both asset classes, the commentary argued. Treasury buybacks involve the department repurchasing its own outstanding securities, a tool used to support liquidity in the world’s largest government bond market. Gold and Bitcoin, meanwhile, are frequently described in market commentary as stores of value outside the fiat system — Bitcoin is often labeled ‘digital gold’ — a framing regularly invoked when deficit spending and inflation dominate the macro agenda.

Discussing Bitcoin’s reaction to the current macro landscape, trading company QCP Capital noted that financial stress signals extended beyond the US, highlighting surging Japanese government bond yields after a rare joint currency intervention in the yen earlier this month.

“The most notable cross-asset signal this week has been the divergence after Treasury’s announcement. Treasuries initially rallied before giving back much of the move. BTC and gold did not retrace to the same extent,” it wrote in its latest Market Color analysis, adding:

“That does not establish a new liquidity or monetary regime, but it does highlight the sensitivity of alternative assets to changes in long-end rates and the dollar.”

Polymarket odds of $90,000 BTC near 50%

As BTC price upside passed 20% over two days, consensus over potential targets through year-end began to improve. Data from prediction service Polymarket put the odds of BTC/USD hitting $90,000 before 2027 at 48% at the time of writing, up sharply since the start of the week.

The move past $77,000 also marked a milestone elsewhere in the market, with Strategy’s Bitcoin treasury hitting its breakeven point as the BTC price climbed. Strategy, the software firm formerly known as MicroStrategy, is the largest corporate holder of Bitcoin, and breakeven means the market value of its holdings has risen back to its average purchase cost.

Some market participants, however, remained skeptical. Trader and analyst Rekt Capital stressed that Bitcoin needed to reclaim its 50-week exponential moving average (EMA) — a widely followed long-term trend measure — at $77,232, a trend line it rejected in January.

“Break the Downtrend and Bitcoin will confirm entry into a new technical Macro Uptrend. Reject from here however and price will maintain its series of Lower Highs,” he told X followers.

“History suggests there’s still time for price to continue its Downtrend.”

Source: Cointelegraph