Bitcoin surged past $80,000 for the first time since May, reaching approximately $81,238 during early Asian trading on Tuesday. The rally, which has lifted the cryptocurrency about 25% over the past week, was driven by fresh investor interest in the so-called debasement trade. Analysts attribute the surge to U.S. Treasury Secretary Scott Bessent's announcement of expanded bond buybacks, which triggered dollar selling and prompted Bridgewater Associates founder Ray Dalio to recommend bitcoin as a hedge against a potential debt crisis.

Glassnode Research analysts noted the return of the dollar debasement narrative. The broader crypto complex also logged gains, with Ethereum rising 0.7% to around $2,490 and XRP jumping 2.2% to $1.51. A short squeeze liquidated roughly $3 billion of short positions over two days according to Bitfinex analysts.

Trading activity in spot bitcoin exchange-traded funds recovered strongly, with more than $500 million in inflows on Aug. 21 signaling a revival in institutional demand. The rally was further amplified by positive sentiment following a White House meeting between U.S. President Trump and crypto executives, where Trump called on Congress to move quickly on the pro-crypto Clarity Act. However, analysts warn the current optimism could fade quickly without tangible regulatory progress.