Last week, U.S. Treasury Secretary Bessent’s attempt to lower the 30Y Bond yield (TLT) succeeded at first, then failed. Yields pulled back sharply on the announcement that the government would double its buyback of long-term bonds.
Unfortunately, the buyback operation of a minimum of $4 billion each is far too small. The U.S. has $40 trillion in debt.
Currency markets sent the U.S. dollar (UUP) (DXY) lower. They panicked to find a substitute for the reserve currency by buying gold (GLD) and Bitcoin (BTC-USD).
Gold gained 5.45% in the last week and is up by nearly 15% in the last month. Bitcoin rose from below $65,000 to close at $77,400 on August 21.
Bitcoin and gold have a history of a “head fake” where the rally would fade abruptly. If it falls again for gold, watch out for Hycroft (HYMC), DRDGold (DRD), and Helca Mining (HL) giving up their gains.
If Bitcoin falls, Strategy (MSTR) risks falling below $100 again. Shares of Riot Platforms (RIOT), Hut 8 (HUT), MARA Holdings (MARA), Circle (CRCL), and Robinhood (HOOD) would also pull back.
Your Takeaway
Investors cannot yet predict whether gold and Bitcoin fall on profit-taking. Watch the U.S. dollar levels. A prolonged slump would suggest that they both rise further. Conversely, if the 30Y bond yield falls toward 5.0%, BTC risks falling back to the $65,000 level.
