Bitcoin Bullish Swing Linked to U.S. Treasury Yields Surge: Former BitMEX CEO Predicts
Summary:
Former BitMEX CEO, Arthur Hayes, predicts a potential Bitcoin bull market spurred by the U.S. government's escalating treasury yields, known as a "bear steepener". Rising short and long-term interest rates are increasing economic pressure, leading Hayes to suggest the resurgence of mass liquidity injections as a solution. However, Hayes warns of significant collateral damage along the way. Meanwhile, the U.S. continues accumulating debt at an alarming rate, recently increasing by $275 billion in a single day. At the time of reporting, Bitcoin (BTC) was trading around $27,500.
A forecast suggests that the bullish swing of Bitcoin (BTC) may be initiated by the U.S. government. On the 4th of October, in an internet forum, Arthur Hayes, previous head of BitMEX crypto exchange, highlighted escalating yields as a precursor for a new Bitcoin and crypto bull market.
Hayes suggests that Bitcoin enthusiasts keep an eye on the U.S's looming "no way out" moment. He notes that U.S. treasury yields are escalating rapidly, indicating that a macroeconomic tipping point is imminent.
This surge is attributed to what's known as a "bear steepener," an event where long-term interest rates rise faster than short-term ones. Hayes questioned why he's so enthusiastic about these markets while yields are skyrocketing, and posited that bank models lack the concept of a bear steepener.
With a sharp increase in the 2s30s curve (difference between the 30-year and 2-year yields), paralleled by rising short and long-term interest rates, economic pressure is mounting.
Given the embedded leverages and non-linear risks in banks' portfolios, they might end up selling bonds or fixing IRS rates as they rise. Hayes warns that this selling spree could lead to more selling, adversely affecting bond prices.
The anticipated result is a resurgence of mass liquidity injections to counteract the quantitative tightening observed since late 2021 that has affected crypto markets. However, Hayes believes this cannot be achieved without significant collateral damage. He succinctly concludes, "The quicker the bear steepener escalates, the sooner somebody ends up bankrupt, the sooner everyone realizes that there's no escape other than printing money to rescue government bond markets, the sooner we return to the crypto bull market."
In related news, TradingView data indicates that the 30-year U.S. government bonds yield reached an all-time high of 5% this week - the first time since just before the 2007 Global Financial Crisis.
Philip Swift, the founder of statistics resource LookIntoBitcoin and the co-founder of the trading suite Decentrader, echoed Hayes' sentiments. A corresponding graph illustrated Bitcoin’s association with treasury yields.
As Swift concluded, if the money supply were to expand again, it would trigger the Bitcoin bull market. Meanwhile, the U.S. continues accruing its highest-ever national debt, alarmingly fast. Just two weeks after exceeding $33 trillion, the government debt increased by an astonishing $275 billion in a single day.
Samson Mow, CEO of Bitcoin adoption company Jan3, noted, "In just one day, the U.S. accrued debt that's more than half of Bitcoin's total market cap. That's roughly equivalent to 10 million BTC." Yet, he observed, people are still unsure if buying at $27k is a good idea.
At the time of reporting, BTC/USD is trading around $27,500. This article does not provide investment advice or recommendations. All investments and trading moves involve risk; readers should do their own research before making decisions.
Published At
10/4/2023 9:22:54 AM
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