Bitcoin has risen 23.2 percent over the past seven days to above $78,000. Bitcoin and gold have climbed together while the dollar has weakened, bringing renewed focus to buying of scarce assets to hedge against falling dollar purchasing power and inflation.

On Aug. 24 (local time), blockchain outlet Decrypt reported the rally gathered pace after the U.S. Treasury said it would increase its plan to buy long-term government bonds by at least two times from the previous level.

Bitcoin had been stuck in a range of $62,000 to $67,000, but broke above the upper end after the announcement. Gold rose to $4,661 an ounce, based on CME Group data. Markets are focusing on the combination of long-term bond yields staying high, a weaker dollar and simultaneous gains in bitcoin and gold.

Lacey Zhang (레이시 장), a research analyst at Bitget Wallet, saw the trend as linked to a shift in institutional investors' perceptions. She described the joint rise in bitcoin and gold as a "subtle shift in institutional sentiment" that appears when a weaker U.S. dollar overlaps with high bond yields. She also said bitcoin is broadening its narrative from a simple high-risk asset to a digital hedge, alongside gold, against structural erosion in the value of fiat currencies.

Some also see it as too early to conclude markets are immediately pricing in a collapse in confidence in the dollar. Jake Kenis Nansen (제이크 케니스 난센), a chief research analyst, said the combination of rising bitcoin and gold with a weaker dollar fits concerns about debt and the dollar, but is not sufficient evidence on its own. He pointed to the possibility that a weaker dollar alongside high interest rates could reflect a widening term premium, inflation uncertainty and shifts in growth expectations.

A pro-cryptocurrency mood in Washington also influenced the rally. U.S. President Donald Trump urged Congress to pass a "fair version" of the Clarity bill. Michael Selik (마이클 셀릭), chairman of the U.S. Commodity Futures Trading Commission, said he is preparing crypto market structure rules in case the bill is delayed.

Short-covering also coincided with the sharp rise in prices. As bitcoin moved above $67,000, a "short squeeze" occurred as traders who had bet on declines bought back positions. CoinGlass data showed more than $4 billion in short positions were liquidated during the rally.

Market attention is expected to focus on whether the rise reflects a structural move away from the dollar or a short-term liquidity-driven run. Zhang said real interest rates and derivatives positioning need to be reviewed together to judge it. She said that if real rates remain high and growth in futures open interest outpaces spot demand, the rise is closer to short-term positioning than a long-term move out of the dollar.

Kenis Nansen said it could be seen as trading driven by weakening fiscal credibility only if bitcoin and gold strength continues while a weaker dollar, a rising long-term risk premium, weak long-term government bonds and expanding inflation expectations also occur together. If it is a liquidity-driven rally, he said it is more likely to move closely with expectations of U.S. Federal Reserve rate easing and broader trends in risk assets such as equities and credit markets.

The rally shows bitcoin is being tested at once as both a risk asset and a digital hedge. More than the price rise itself, the key to market interpretation has become which direction its linkages with the dollar, gold and long-term government bonds become fixed.