Both gold and Bitcoin have recently seen breakthroughs. Bitcoin has broken through the descending trend line formed during this round of bear market and has re-established itself above the 21-week moving average, which was previously an important dividing line; gold has also strengthened after reaching a historic high at the beginning of the year and undergoing a significant pullback. Meanwhile, U.S. government debt has surpassed $40 trillion, and the yield on the 10-year U.S. Treasury bond briefly touched around 4.70%, with global long-term financing costs continuing to remain under pressure.

As the size of U.S. debt continues to expand, future policies may have to tolerate a relatively high level of inflation for a period to alleviate actual debt pressure. Against this backdrop, hard assets such as gold and Bitcoin have regained attention, and a series of measures recently taken by the U.S. Treasury regarding the long-end Treasury bond market further signal that the macro environment is changing.

$40 Trillion U.S. Debt Combined with 4.70% Treasury Yield: Pressure in the Long-End Market Rises

Over the past year, the scale of U.S. government debt has grown by approximately 10%, rising from $36 trillion to $40 trillion. In early July 2025, the U.S. statutory debt ceiling was raised by another $5 trillion, releasing greater space for subsequent debt expansion. At the same time, major U.S. technology companies are borrowing at record levels to finance AI infrastructure construction, and a significant increase in corporate bond supply is further competing for investor funds against U.S. Treasury bonds.

Overseas demand is also changing. Japan remains the largest overseas holder of U.S. Treasury bonds, with holdings of about $1.1 trillion, but as the yield on Japan’s 10-year government bonds nears 3% and the yield on 30-year bonds rises above 4%, the appeal of domestic bonds has significantly increased. Chinese investors have also shown a similar trend, with their holdings of U.S. Treasury bonds decreasing by about $700 billion from historical highs.

In response to the pressures in the long-end market, the U.S. Treasury announced on August 19 that it would at least double the liquidity support repurchase scale for nominal coupon Treasury bonds with maturities from 10 to 30 years, raising the single maximum scale from $2 billion to at least $4 billion, to be implemented from September 9 to November 4. Although this is not entirely the same as the Federal Reserve's "Operation Twist" from 2011, the market effects sought by both are similar: easing pressure in the long-end market and limiting further increases in long-term financing costs.

Gold and Bitcoin Breakthroughs: Hard Assets Regain Attention

The combination of gold and Bitcoin remains an effective means of hedging against the continuous rise in debt. As U.S. debt continues to expand, the logic of funds rotating towards hard assets such as gold and Bitcoin is further reinforced. At the same time, the market had previously priced in the possibility of two more interest rate hikes within the year, but the current trend of cooling inflation has once again emerged, bringing new changes to the market environment.

Technical signals are also worth noting. After reaching a historic high at the end of January 2026, gold underwent a significant pullback, with its weekly relative strength index dropping to its lowest level since the start of this round of gold bull market in September 2023, creating conditions for a reversal. Bitcoin has already broken through the descending trend line of this bear market and has re-established itself above the 21-week moving average. Previous cyclical indicators also show that Bitcoin is very close to the bottom, and August could become an important time window for confirming this round’s cycle bottom.

Overall, the U.S. government debt surpassing $40 trillion, long-end Treasury yields being under pressure, and the U.S. Treasury expanding the repurchase of long-term Treasury bonds together form the important macro backdrop behind the recent breakthroughs of gold and Bitcoin.

Policy interventions may temporarily alleviate pressure on long-end yields, but it is difficult to fundamentally reverse the pressures facing debt supply and the global fixed income market. This implies that the trend of funds flowing back into gold may continue, and a similar logic may gradually manifest in Bitcoin as well. What will be more interesting to watch next is whether the Bitcoin cycle bottom in August can be ultimately confirmed and whether the policy responses to long-end Treasury yields can continue to be effective.

The Market Direction is Unclear, How to Respond to Volatility

Whether the Bitcoin cycle bottom can be confirmed in August remains to be seen, but the divergence surrounding debt and policy is likely to keep volatility at a high level. Besides directly holding hard assets, investors can also use structured tools to turn this uncertainty into returns.

BIT dual currency financial management supports mainstream currencies such as BTC and ETH, with durations from 1 day to 6 months. Investors who agree with the logic of hard assets but are concerned that the bottom has not yet been reached can choose to buy at a lower target price; investors who already hold positions and wish to cash out partially during a rebound can choose to sell at a higher target price. In both scenarios, investors can receive interest during the holding period and settle in one of the two currencies upon maturity.

Dual currency financial management is a non-principal-protected product and may settle in a non-investment currency at maturity. Please participate only after fully understanding the product structure and risks. [Learn about dual currency financial management]

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Disclaimer: The market carries risks, and investments should be cautious. This article does not constitute investment advice. Digital asset trading may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consulting financial professionals. BIT is not responsible for any investment decisions made based on the information provided in this content.

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