Bitcoin Hits Its Stride As Dollar Weakness And Treasury Buybacks Fuel Hard-Asset Rally, Galaxy Analysts Call Bottom

• The U.S. Dollar Index fell below its 200-day moving average for the first time in more than three months as Bitcoin posted its best week since March 2024.
• Galaxy Digital's Alex Thorn and Beimnet Abebe argued the Treasury's buyback expansion was effectively yield curve control.
• Thorn called the rally a "hard asset story" as gold, silver and Bitcoin surged while the Nasdaq stayed flat.

The U.S. dollar index (DXY) fell below its 200-day moving average for the first time in more than three months, dropping to 98.78 as Bitcoin (BTC) posted its strongest weekly rally since 2024. Galaxy Digital (GLXY) analysts said Bitcoin’s four-year cycle bottom was likely in place. 

Barchart data showed that the DXY had slid below the key technical level that had held as support since mid-May, a breakdown that tends to signal sustained dollar weakness rather than a one-off dip. Meanwhile, Bitcoin posted its best week since March 2024 on Saturday. 

The move played directly into the thesis laid out on Galaxy's podcast on Friday, where the Head of Research, Alex Thorn, and a Galaxy trading analyst, Beimnet Abebe, discussed that the Treasury's decision to double long-end buyback capacity from $2 billion to $4 billion per operation was not about the dollar amount but about the message. 

"The most important part is the signal that it sends, that we will make sure that the back end of the curve behaves in a way that we think is appropriate," Abebe said, while Thorn added that Treasury Secretary Scott Bessent had effectively "doubled the size of his cannon." 

Speaking on it, Chief FX Strategist of Goldman Sachs (GS) Robin Brooks said in a substack note on Thursday that “Markets are primed for Dollar debasement to resume and - as Japan shows - it can be next to impossible to stabilize a currency once it enters a devaluation spiral. The US is playing with fire with this buyback.”

'Your Currency Should Depreciate'

Abebe argued that the Fed was actively “doing quantitative easing (QE) right now” because its balance sheet was expanding while the Treasury was buying back longer-dated paper and re-issuing at the short end. When a government engaged in that kind of balance sheet manipulation, “your currency should depreciate, and that's exactly what we've seen,” he added.

Thorn pointed out that gold was up 3.7%, silver was up 3.9%, and the dollar was down 0.8% on the day, while the Nasdaq (NDAQ) was essentially flat. He called it a "hard asset rally story in which Bitcoin is also participating, which we haven't seen in a while."

Cycle Bottom 'Probably In'

Both Thorn and Abebe said that they believed Bitcoin's four-year cycle bottom was likely in place, arriving slightly ahead of the September-October window that previous cycle analogy would suggest. 

Thorn said the market had flipped from a "sell rips" to a "buy dips" regime, and that the largest cost basis cluster in Bitcoin's supply now sits around $64,000, meaning the bulk of recent buyers are in profit. 

He said the move was amplified by thin summer liquidity, with $400 million in short liquidations in a single minute, and the largest retail “buy skew” in BlackRock's (BLK) iShares Bitcoin Trust ETF (IBIT) in two years. 

Dalio Sees Bigger Shift

The hard asset rotation Galaxy described aligned with a broader warning from billionaire founder Ray Dalio, who said on Friday that the US could face a sovereign debt crisis within three years. 

Dalio recommended that investors allocate 10% to15% of their portfolios to gold and hold a modest position in Bitcoin, highlighting a similar shift away from dollar-denominated assets that drove this week's rally.

How Did Retail Traders React?

BTC’s price was up 0.6% over the past 24 hours, trading at $77,215.10. On Stocktwits, the retail sentiment around BTC remained in the ‘extremely bullish’ zone, while chatter around it stayed at ‘extremely high’ levels over the past day.

A Stocktwits poll asking retail traders where they see Bitcoin going next, 48% predicted that BTC will climb above $100,000, while another 22% voted that the apex cryptocurrency would at least reclaim $80,000 next. 13% Voted that Bitcoin would remain between $70,000 and $80,000, while only 17% predicted a drop back below $70,000. 

Simply put, 70% of respondents expect Bitcoin to reach $80,000 or higher.

Read also: TRUMP, ZEC And POL Leave Bitcoin And Ethereum In The Dust – Is An Altseason On The Way?

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