How bitcoin, gold went from a slump to an MVP week

Bitcoin and gold shot higher this week, with both getting a boost from some frantic action surrounding the bond market, and the cryptocurrency also benefiting from activity in Washington.

Bitcoin had dropped from a January high of around US$95,000 to below US$60,000 at the end of June. Investors shied away from speculative assets earlier in the year and crypto supporters were concerned about the lack of movement on proposed regulation of the industry. On Friday, bitcoin rose above US$77,000.

Gold hit a high above US$5,300 in January but dropped to around US$4,000 in June as rising rates made interest-bearing investments more attractive. Gold rose to US$4,661 on Friday.

The first jolt arrived on Wednesday when the Treasury Department announced plans to significantly increase its buyback of long-term Treasuries, or government debt. On the same day, President Donald Trump, who made about US$1.2 billion last year from various crypto holdings, urged Congress to move quickly on crypto legislation.

There was an almost immediate reaction, which included a dollar sell-off and a jump in the value of gold and bitcoin as investors moved towards alternative assets.

How these two investments caught fire can be understood in the context of several developments this week.