US Debt Fears Drag Down Dollar, While Bitcoin and Gold Take Off

Key Takeaways

• The U.S. dollar weakened due to market unease over Trump’s tax-and-spending bill and a weak 20-year bond auction.
• Bitcoin hit an all-time high of over $111,000, boosted by macroeconomic tailwinds and growing institutional interest.
• The rise in the BTC-to-gold ratio reinforces Bitcoin’s outperformance as a store of value.

Traditional U.S. assets are losing their luster amid deepening doubts over Washington’s spending plans and bond market health.

As the dollar stumbles, alternative assets are seizing the spotlight, with Bitcoin (BTC) smashing records and gold regaining its shine.

Dollar Falls on U.S. Debt Fear

The U.S. dollar fell sharply on Thursday, dragged down by growing concerns over the Trump administration’s tax-and-spending proposals and a lackluster 20-year Treasury bond auction.

Divisions within the Republican Party have stalled progress on the proposed fiscal package, which analysts warn could add between $3 trillion and $5 trillion to the national debt.

The uncertainty around the bill has rattled investors, fueling fears about long-term fiscal sustainability and weakening appetite for U.S. assets.

Adding to the pressure, a disappointing $16 billion auction of 20-year Treasury bonds priced at a record high yield of 5.047%, the highest since November 2023. The weak demand sent yields surging and signaled a broader retreat from U.S. debt instruments.

Compounding the dollar’s decline, markets are increasingly wary of potential efforts by U.S. officials to push for a weaker currency in upcoming trade discussions at the G7 meetings in Canada.

With fiscal uncertainty, ballooning debt concerns, and volatile trade dynamics at play, investors appear to be pulling back from the greenback in favor of alternative safe-haven assets.

Bitcoin Sets New Record High

Bitcoin (BTC) benefited from the dollar’s weakening. It surged past $109,000, reaching a fresh peak of over $111,000 .

The new all-time high underscores robust investor confidence, driven by a blend of macroeconomic tailwinds, encouraging regulatory developments, and continued interest from institutional players, which are fueling the broader crypto rally.

Linh Tran, Market Analyst at XS.com, told CCN,

“Actions from prominent players have also reinforced investor sentiment. A well-known Bitcoin whale, James Wynn, has substantially increased his long position, bringing his total holdings to $1 billion.”

According to Tran, this move reflects strong confidence in Bitcoin’s long-term trajectory. It may also amplify short-term bullish sentiment through a psychological spillover effect.

“The convergence of favorable macro conditions, regulatory support, and sustainable institutional capital provides a solid foundation for Bitcoin to extend its rally. The next psychological target is projected to be around $115,000, should current trends hold,” the analyst added.

Nigel Green, CEO of global financial advisory firm deVere Group, told CCN,

“Bitcoin’s blistering rise to a fresh all-time high above $110,000 has torched expectations—and it’s forcing a reappraisal of what’s possible in 2025.”

“If current conditions hold, and we get a real regulatory green light before the August recess, a price above $175,000 is increasingly within reach,“ Green added.

Gold Shines Despite Risky Assets Gaining Momentum

Gold prices rose by over 0.5%, trading above $3,300 as market jitters intensified over the U.S. tax bill vote and heightened Middle East tensions.

XAU/USD climbed to $3,317 after rebounding from a session low of $3,285.

Meanwhile, geopolitical concerns supported bullion prices, even as China and the U.S. agreed to ease tariffs for 90 days.

Traders closely watch upcoming Fed speeches, economic data, and jobless claims.

Yields on U.S. 10-year Treasuries surged to 4.58%, while real yields hit 2.229%, further lifting gold amid fiscal concerns. Furthermore, Israel’s reported preparations to strike Iranian nuclear sites added to safe-haven demand.

Technically, gold remains in an uptrend, with buyers targeting $3,350 next. A break above could lead to $3,400 and retest the all-time high at $3,500. On the downside, key support lies at $3,300, followed by $3,204 and the 50-day SMA at $3,184.

The Bitcoin-to-Gold ratio of 32.9 means that one Bitcoin is currently worth 32.9 ounces of gold. As the ratio extends its recent uptrend, it signals bullish sentiment for crypto over traditional safe-haven assets.