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After a two-week pause, the cryptocurrency market returns with one of its strongest advances of the year. Between August 18 and August 25, bitcoin rose from approximately $64,700 to more than $80,000, briefly reaching $81,200. This represents an increase of approximately 25% in only one week and its highest level since May.
Ethereum also participated fully in the movement. Its price increased from approximately $1,915 to nearly $2,500, representing a gain of approximately 30%. Several other cryptocurrencies recorded even larger advances, confirming that the movement was not limited to bitcoin.
The Rivemont Crypto Fund was fully invested throughout this rally. We were therefore able to participate fully in the market’s recovery after maintaining our exposure despite an environment that remained uncertain at the beginning of the period.
One position in the Rivemont Crypto Fund deserves particular attention: Zcash, or ZEC, is performing exceptionally well at present. Its price rose from approximately $508 on August 18 to more than $830 on August 25, after temporarily reaching nearly $885. The advance therefore exceeds 60% in one week and brings ZEC to its highest level since 2018.
The rally can first be explained by the progress Grayscale has made toward converting its existing Zcash fund into a spot ETF listed on NYSE Arca. A new version of the prospectus was filed with the Securities and Exchange Commission on August 21. The vehicle is expected to be named The Zcash ETF and retain the ticker symbol ZCSH.
The fund already existed on the over-the-counter market and held more than $260 million in assets as of August 21. Its conversion therefore does not mean that all this capital represents new demand for ZEC. However, a listing on a national securities exchange can significantly broaden access to the product, increase its liquidity and allow authorized participants to create and redeem shares.
This arbitrage mechanism is important. A closed-end fund trading over the counter can trade at a substantial premium or discount to the value of its assets. A true ETF with a functioning creation and redemption mechanism instead tends to remain close to its net asset value. This structure makes the product more efficient and potentially more attractive to institutional investors.
The prospectus provides for creations and redemptions in blocks of 10,000 shares. Creations may be completed in cash or, under certain circumstances, directly in ZEC. In-kind redemptions are not currently permitted. The product also carries an annual fee of 2.5%, payable in ZEC, and Grayscale plans to use the fees received during the first year to support the fund’s marketing and certain initiatives related to the Zcash network.
The second significant development concerns the vote surrounding the NU7 network upgrade. A blockchain snapshot was taken on August 24 to determine eligible holders. To participate, users were required to hold spendable ZEC in the Ironwood shielded pool at the designated block.
Voting begins on August 25 and is expected to continue through September 14. The questions include the possibility of replacing periodic reductions in block rewards with a more gradual issuance curve, the timetable for returning ZEC removed through the Network Sustainability Mechanism to circulation, the deprecation of the older Sprout pool and a potential reduction in block-generation time from 75 seconds to 25 seconds.
The process itself represents an interesting advancement. Holders can vote using shielded ZEC without publicly revealing their identity or the exact balance of their wallets. Votes are encrypted, and only the aggregate results are intended to be published. It therefore provides a practical demonstration of the network’s privacy features applied to its own governance.
Zcash retains several of bitcoin’s economic characteristics, including a maximum supply of 21 million coins, a proof-of-work mechanism and a limited issuance schedule. Its main difference lies in the ability to conduct shielded transactions using zero-knowledge cryptographic proofs. Users can preserve the confidentiality of transaction amounts and addresses while retaining the ability to disclose certain information when necessary.
The combination of this scarcity, its privacy features and potentially improved institutional access explains part of the current revaluation. ZEC nevertheless remains an extremely volatile asset. Futures-market volume has increased sharply, and a significant portion of the rally appears to have been financed through leverage. After a gain of more than 60% in one week, substantial corrections would be entirely normal.
The main catalyst for the crypto market rise came from the U.S. bond market. For several weeks, long-term bond yields had been rising amid concerns about budget deficits, persistent inflation and the considerable volume of new issuance investors will be required to absorb. The yield on 30-year U.S. Treasuries had reached approximately 5.34%, its highest level in nearly two decades.
These high yields represent a problem for the U.S. government because they gradually increase the cost of financing its debt. They also become a drag on the economy, housing markets and risk assets. Government bonds yielding more than 5% with relatively low credit risk become highly competitive with stocks, cryptocurrencies and other investments that provide no guaranteed income.
On August 19, the U.S. Department of the Treasury announced that it would at least double the maximum size of its buyback operations involving 10- to 30-year securities. The current limit of $2 billion per operation will therefore increase to at least $4 billion beginning September 9 and remain in effect through November 4. Treasury Secretary Scott Bessent subsequently indicated that certain operations could exceed that amount.
It is important to understand how these buybacks work. The U.S. Treasury regularly issues new securities to finance the government and replace securities reaching maturity. The most recent issues generally become the market’s benchmark securities. They are highly liquid and trade easily. Older issues gradually become less liquid, even when they have similar maturities.
During a buyback operation, the Treasury invites holders of certain older securities to sell them back. Participants submit their securities along with the price at which they would be willing to sell. The Treasury then selects the most advantageous offers up to the announced limit. The repurchased securities are removed from circulation.
The official objective is therefore not necessarily to reduce the total debt, but to improve the functioning of the market. The Treasury removes older and less-liquid securities while continuing to issue new securities that are easier to trade. This can narrow bid-ask spreads, facilitate large transactions and reduce the premium investors demand to hold certain long-term bonds.
The financing of these operations nevertheless remains essential. Unlike the Federal Reserve, the Treasury cannot create new bank reserves at will. To repurchase a bond, it must use liquidity already held in its general account at the Federal Reserve, commonly known as the TGA, or obtain the funds by issuing other securities.
The TGA essentially serves as the U.S. government’s bank account. It held approximately $940 billion at the time of the announcement. If the Treasury uses part of this balance to repurchase bonds, the money leaves its account at the Federal Reserve and returns to the financial system. Bank reserves and available liquidity can then increase temporarily, which is generally favorable for financial assets.
However, this liquidity is not necessarily permanent. The Treasury will eventually have to rebuild its cash balance, either through government revenues or by selling new bonds. A rapid replenishment of the TGA could then remove some of this liquidity from the system.
The Treasury could also finance its buybacks directly by issuing more short-term securities. Under this scenario, it would remove long-term bonds from the market and replace them with shorter-dated Treasury bills. The total debt would not truly decrease, but its composition would change. The market would have less duration risk to absorb because the value of very long-term bonds is considerably more sensitive to changes in interest rates.
This distinction explains why the buybacks do not, strictly speaking, constitute a new round of quantitative easing. Under a quantitative-easing program, the Federal Reserve creates reserves and purchases bonds that it retains on its balance sheet. The private sector is then left with more liquidity and fewer bonds in circulation, without necessarily requiring the issuance of a new security to finance the operation.
In the present case, the Treasury is primarily conducting a debt-management operation. The purchased bonds must be paid for with existing funds or with the proceeds of another issuance. The program more closely resembles a transformation of the debt’s maturity profile than direct money creation.
The market reaction was nevertheless spectacular. By becoming an additional buyer of long-term bonds, the Treasury increases demand for them. Their prices rise while their yields decline. The announcement therefore caused the 30-year Treasury yield to fall sharply, from a high of approximately 5.34% to nearly 5.19% during the initial movement.
A decline in long-term yields reduces the rate investors use to discount the value of future income. This mechanism particularly benefits growth stocks, technology companies and other assets whose value depends heavily on profits expected several years in the future.
It also reduces the relative appeal of bonds compared with non-yielding assets such as gold and bitcoin. When the real yield offered by bonds declines, the opportunity cost associated with holding these assets becomes less significant.
There is also an effect on the U.S. dollar. Some investors interpreted the announcement as a sign that authorities would have little tolerance for another significant increase in long-term yields. If the government intervenes to prevent the bond market from demanding greater compensation for deficits and inflation, some of the pressure can shift to the currency.
This is what markets sometimes refer to as the debasement trade. Investors seek protection against a gradual loss of purchasing power by buying scarce assets or assets that are difficult to produce. Gold represents the traditional version of this strategy, while bitcoin represents a digital version that is more volatile and generally much more sensitive to shifts in sentiment.
Gold reached a three-month high of approximately $4,650 per ounce and is now up about 15% since the beginning of August. The fact that gold and bitcoin advanced simultaneously is significant. Gold benefited from its safe-haven status, while bitcoin benefited from both the monetary-scarcity theme and the return of risk appetite.
Bitcoin does indeed possess this dual personality. It can behave like a highly speculative technology asset when liquidity increases, but it can also serve as an alternative to the traditional monetary system when confidence in public finances or currencies declines. Over the past week, both forces moved in the same direction.
The initial movement was subsequently amplified by a significant short squeeze. Several investors had bet that bitcoin would remain below the resistance levels between $65,000 and $67,000. When those levels were broken, trading platforms began automatically liquidating leveraged short positions.
Closing a short position requires purchasing the asset. These forced purchases push the price higher, triggering additional liquidations and further buying. This cycle helped bitcoin gain several thousand dollars within a few hours. Several billion dollars in short cryptocurrency positions were reportedly liquidated during the sequence.
The rally was not, however, based solely on derivatives. Spot Bitcoin ETFs recorded five consecutive positive sessions between August 18 and August 24. They attracted approximately $189 million on August 18, $517 million on August 19, $606 million on August 20, $308 million on August 21 and $338 million on August 24.
Net inflows therefore reached nearly $2 billion across the five available sessions. This demand represents an important shift from the outflows observed earlier in the summer. It shows that institutional investors did not merely watch the movement from the sidelines and instead helped absorb selling pressure.
President Donald Trump’s renewed support for the CLARITY Act was another positive factor. The president called on Congress to adopt a version of the bill that would provide clearer definitions for companies operating in the sector. Although the legislative outcome remains uncertain, this support temporarily reduced concerns about another regulatory stalemate.
From a technical perspective, breaking through the $65,000, $67,000, $70,000 and $75,000 areas in rapid succession represents a major improvement. The region between $77,000 and $78,000 now becomes the first support area to monitor. A correction below this zone could bring bitcoin back toward $74,000 and then the $70,000-to-$72,000 region.
On the upside, the week’s high of approximately $81,200 represents the first resistance level. A sustained advance above this level would open the way toward $85,000. However, the nearly vertical nature of the movement increases the likelihood of a consolidation. A pause following a 25% advance would not necessarily call the new trend into question.
Altcoins also advanced sharply. Solana gained nearly 30% and approached $100, while XRP recorded an even larger increase. These movements are encouraging, but they were also fueled by leverage and the liquidation of short sellers. It therefore remains too early to conclude that the market has entered a genuine and sustainable altcoin season.
It is also important to remain cautious about the lasting consequences of the bond buybacks. The new program had not yet conducted any expanded operations as of August 24. It is scheduled to take effect in September, and the Treasury has confirmed that it will continue its normal issuance schedule in parallel, including the issuance of long-term bonds.
The announced amounts also remain modest relative to the size of the U.S. bond market and a federal debt that now exceeds $40 trillion. Buybacks can improve liquidity and temporarily reduce the amount of duration the market must absorb, but they do not resolve budget deficits or the rising cost of interest payments.
Long-term yields also recovered much of their initial decline before falling slightly again on August 25. This development shows that the market is not entirely convinced that the buybacks will be sufficient to stabilize the bond market.
Two scenarios are now possible. If the buybacks genuinely improve liquidity, yields decline and the dollar remains under pressure, the environment will continue to favor bitcoin, gold and risk assets. Bitcoin could then continue to benefit simultaneously from a lower cost of capital and concerns surrounding the value of traditional currencies.
Conversely, if investors view these interventions as an attempt to conceal a deeper budgetary problem, the risk premium demanded on U.S. bonds could begin rising again. Gold and bitcoin could still benefit from fears of currency debasement, but growth stocks and the most speculative assets would be vulnerable to another increase in real yields.
In summary, the August 18–25 period represents a major shift for the cryptocurrency market. Bitcoin gained approximately 25%, Ethereum nearly 30%, and several altcoins advanced even further. The Rivemont Crypto Fund was fully invested during this movement and also held a position in ZEC, which experienced an exceptional week.
The rally was triggered by the Treasury’s announcement of increased long-term bond buybacks and then amplified by the weaker dollar, renewed inflows into ETFs, an improving regulatory environment and the massive liquidation of short positions. Zcash added its own catalysts through Grayscale’s proposed ETF and the launch of its NU7 governance process.
The next phase will depend primarily on bitcoin’s ability to consolidate above $75,000 to $77,000, the direction of bond yields and the persistence of ETF inflows. Following such a rapid advance, volatility is likely to remain elevated. Nevertheless, the market’s structure has improved considerably, and investors now have several catalysts that were not present at the beginning of the month.
The presented information is as of August 25th, 2026, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
