Bitcoin has posted its largest dollar-denominated weekly gain in history, adding $14,775 to close at $77,593, representing a 23.5% gain over seven days. According to Galaxy Research, this breakout against both the US dollar and gold has strengthened the view that the cryptocurrency is entering a new cycle backed by macro conditions it has not experienced before. The rally was driven by two key catalysts: the US Treasury's decision to double its long-bond buyback operations to ease pressure on Treasury yields, and President Trump urging Congress to pass the CLARITY Act that would set federal rules for classifying digital assets as securities or commodities. The move also triggered a significant short squeeze, with roughly $2.7 billion in short positions liquidated across crypto markets that week, as reported by CNBC. The weekly close jumped from $62,818 to $77,593, marking the 41st largest percentage increase since 2010 and Bitcoin's best week since March 2023 by percentage increase. However, Investing.com India notes that Bitcoin peaked a year ago, hitting an all-time high of $126,210 in October 2025, and has since fallen more than 50%, bottoming near $58,000 two months ago. The question remains whether this marks the start of a sustained recovery or simply a dead cat bounce within a bear market.
The weekly performance represents Bitcoin's best week since 2023, with the weekly candle breaking a descending trendline stretching back to the October 2025 record high. Bitcoin's price bounced from the $63,000 to $66,000 support zone and cleared the descending resistance line drawn from the record high of $126,195. The cryptocurrency also pushed through the $74,000-$76,000 band, which should now serve as support. Weekly volume expanded alongside the move, though it stayed below June's peak, while the BBWP indicator expanded from an extreme low to near-maximum volatility. The daily chart carries the more durable signal, with BTC reclaiming its 200-day moving average near $69,000 - a level that had capped every advance of the downtrend since last October. Daily RSI now reads 81.14, well above the conventional overbought threshold of 70, though momentum has stretched rather than reversed on its two most recent occurrences. The daily chart shows Bitcoin trading above its four tracked simple moving averages, with the 20-day SMA at $69,711, 200-day SMA near $69,257, 50-day at $66,457, and 100-day at $66,224.
Institutional demand returned alongside the price recovery, with U.S. spot Bitcoin ETFs recording $1.92 billion in total net inflows during the trading week ended August 21, according to Galaxy Research data. The weekly total was the highest since October 2025, when Bitcoin was still trading around the peak of its previous bull cycle. BlackRock's IBIT accounted for approximately $1.33 billion of those inflows, while the ETF group recorded its strongest week since October 2025. August is on track to post the biggest monthly net inflow since Bitcoin's prior all-time high, which would reverse months of ETF outflows that left the funds as net sellers in 2026. However, ETF holders remain about 6% underwater even after the rebound, with their average cost basis sitting at $84,029 against a $78,955 spot price. The Crypto Fear & Greed Index climbed to 74 on August 25, its highest level since October 2025, reflecting sharp sentiment swing. This surge in institutional interest reflects growing confidence in Bitcoin's store-of-value proposition, with Bernstein reporting that Bitcoin had attracted roughly $12 billion in combined ETF and corporate treasury inflows during 2026, even as spot ETF investors had withdrawn a net $2.6 billion at the time. However, Investing.com India notes that one strong week doesn't undo a year-long drawdown, and Bitcoin's history is full of head-fake rallies, with the optimistic bullish case resting on deleveraging and the Treasury's actions to manage yields.
Derivatives data presents a complex picture of the current market structure. Roughly $2.7 billion of shorts liquidated on August 19 when the US Treasury doubled its long-dated bond buybacks, with Glassnode data showing aggregate perpetual funding reaching its highest level in 2026 during the squeeze. This contrasts sharply with April's advance toward $79,000, which was accompanied by persistently negative funding rates. However, open interest data tells a different story, with CoinGlass data putting exchange open interest near $57.5 billion, up from roughly $46.5 billion before the breakout. That total still sits below the January peak near $65.3 billion and the May peak near $64 billion, both readings that preceded sharp corrections this year. Leverage has therefore returned without reaching saturation, with a climb toward $64 billion indicating a crowded market again. The 4-hour chart shows Bitcoin's trend remains bullish despite weakening momentum, with the 4-hour Supertrend at $76,687 and the moving average convergence divergence (MACD) presenting a more cautious picture. The MACD line stands near 810, below the signal line at approximately 1,033, while the histogram remains negative at minus 222, suggesting the rally has lost some short-term force since Bitcoin tested $81,000. However, the negative histogram bars are beginning to contract, indicating that downside momentum may also be easing.
Bitcoin's performance against gold forms another key component of the cycle call, with the Bitcoin-to-gold ratio rising to 16.73 ounces of gold per Bitcoin, its highest level since May, according to Longtermtrends data cited by The Block. Cole argues that the BTC/gold ratio turned before the dollar price at recent inflection points, with Bitcoin peaking against gold in December 2024 while its dollar price held up until October 2025. The sequence reversed at the low, with Cole dating the BTC/gold bottom to February 2026 and the dollar bottom to July 2026, approximately five months later. This breakout pattern aligns with broader market trends where Bitcoin climbed roughly 21% between Wednesday and Friday last week, briefly surging above $79,000. Cole expects relative performance to play an important role in deciding where new capital enters the scarcity trade, stating that "When Bitcoin is the fastest horse, it will attract a disproportionate share of that capital." Investing.com India notes that the optimistic bullish case rests on deleveraging and the Treasury's actions to manage yields, with many crypto pundits believing that leverage used by Bitcoin investors last summer was massive and has since normalized, which might ease pressure on Bitcoin. Bitcoin's spot price traded above $80,000 on Thursday, with whether the rebound continues depending on ETF inflows holding into September and whether last week's short squeeze proves lasting or temporary.
Cole sees another development as particularly significant: Bitcoin has now broken higher against both the dollar and gold. He expects the next cycle to be the strongest Bitcoin has produced, stating that seeing both relationships turn higher together gives him more confidence in the next 12 to 18 months and in the much larger opportunity that could unfold over the years ahead. The executive noted that Bitcoin set dollar records while losing ground to gold throughout the rally, creating negative sentiment that has now reversed with the current breakout. His forecast is based on dollar weakness and rising demand for scarce assets, with Cole expecting the U.S. dollar to enter a sustained period of weakness and arguing that Bitcoin has never operated through such a macro environment. He expects a weaker dollar, continued monetary debasement and demand for assets with fixed or difficult-to-expand supplies to direct more capital toward scarce monetary assets, with Bitcoin's combination of absolute scarcity, global liquidity, portability and around-the-clock settlement giving it characteristics that differ from gold. Investing.com India suggests that the recent Treasury buyback announcements lead some to question the dollar and US Treasury bonds as safe havens, thus alternative currencies like gold and Bitcoin may be gaining value for some investors.
