Bitcoin bulls may soon have the United States government to thank for a potential uptrend in the cryptocurrency market. Arthur Hayes, former CEO of BitMEX, predicts that the ballooning yields on U.S. treasury bonds could be a precursor to a new bull market for Bitcoin and other cryptocurrencies.
Hayes points to the phenomenon known as a “bear steepener,” where long-term interest rates rise more quickly than short-term rates. He argues that this steep rise, combined with the increasing pressure on the economy from rising long and short-term interest rates, could lead to a return to mass liquidity injections, ultimately benefiting the crypto market.
The rapid rise in U.S. treasury yields is noticeable, with the 30-year bonds’ yield hitting 5% this week for the first time since August 2007, before the Global Financial Crisis. This supports Hayes’ prediction of a major catalyst for a Bitcoin bull market.
Philip Swift, creator of LookIntoBitcoin and co-founder of Decentrader, also supports Hayes’ prognosis. He suggests that a theoretical return to money supply expansion, resulting from the government’s need to save bond markets, could be the major catalyst for a Bitcoin bull market.
Moreover, the U.S. national debt continues to soar at an astonishing pace. Just two weeks after surpassing $33 trillion for the first time, the government added $275 billion to the total debt in a single day. This massive increase has not gone unnoticed, with financial commentators expressing concerns about the sustainability of such debt levels.
While these developments may be positive for Bitcoin and the crypto market, Hayes warns that there may be major casualties along the way. He believes that the faster the bear steepener rises and the more people go bankrupt, the sooner everyone will recognize that the only way out is through money printing to save the government bond markets. However, he also acknowledges the risks and uncertainties associated with investing and trading, emphasizing the need for individual research and decision-making.
In conclusion, the current macroeconomic conditions and escalating U.S. treasury yields could potentially pave the way for a Bitcoin bull market. However, it remains to be seen how the government will navigate the challenges posed by its record-high debt and the impact of potential liquidity injections on the economy and financial markets.