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 around $95,000 to below $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 $77,000.

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

The first jolt arrived Wednesday when the Treasury Department announced plans to significantly increase its buybacks of long-term Treasurys, or government debt. On the same day, President Donald Trump, who made about $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 toward alternative assets.

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

The Treasury stepped into the bond market – forcefully

In a surprise announcement Wednesday, the U.S. Treasury Department said that it would at least double the size of its planned purchases of longer-term government debt. The maneuver was intended to calm bond markets after a sustained sell-off, meaning investors were asking for higher yields to lend money to the U.S., which suddenly seemed more risky.

That’s because while the Treasury intervention worked, at least for a short period, it also raised questions about whether the government is trying to push borrowing costs lower despite inflationary pressures. Treasury Secretary Scott Bessent is attempting to lower long-term borrowing costs, a move that can put upward pressure on inflation at a time when inflation is already elevated. Bessent’s maneuver could handcuff the Federal Reserve, which fights inflation by raising interest rates.

Debt, inflation, and the “debasement trade” heat up

Then there’s the national debt, which surpassed a record $40 trillion on the same day that the Treasury’s actions unfolded. The milestone figure was recorded just five months after the U.S. hit a record $39 trillion debt in March. It reached $38 trillion five months before that, in October.

There is already a lot of anxiety over inflation, particularly because of the conflict in Iran and soaring energy prices. If yields on U.S. bonds are not truly reflecting risk, you can often see that play out in the value of the U.S. currency, which took a significant downward swoop Wednesday.