Bitcoin (BTC $27,594) flipping full bull could come courtesy of the United States government, a new prediction says.
In an X thread on Oct. 4, Arthur Hayes, former CEO of crypto exchange BitMEX, eyed ballooning yields as precursor to a new Bitcoin and crypto bull market.
Hayes: Bitcoin bulls should eye U.S. "no way out" moment
U.S. treasury yields are “screaming higher,” and with that, Hayes believes that a macroeconomic flashpoint is only a matter of time.
The reason comes in the form of a so-called “bear steepener” — a phenomenon that describes long-term interest rates rising more quickly than short-term ones.
“Why do I love these markets right now when yields are screaming higher? Bank models have no concept of a bear steepener occurring,” he argued.
Given the current steep rise in the 2s30s curve — the difference between the 30-year and 2-year yields — combined with rising long and short-term interest rates, the pressure across the economy is rising.
“Due to the leverage and non-linear risks embedded in banks' portfolios, they will be selling bonds or paying fixed on IRS as rates rise. More selling, begets more selling, which is no bueno for bond prices,” Hayes continued.
The result should be clear — a return to mass liquidity injections, counteracting the quantitative tightening seen since late 2021 which has pressured crypto markets.
For Hayes, this cannot come without major casualties along the way. He concluded:
The faster this bear steepener rises, the faster someone goes belly up, the faster everyone recognises there is no way out other than money printing to save govt bond markets, the faster we get back to the crypto bull market :). The Lord is my Shepherd, I shall not want.
U.S. 30-year bonds yield 1-month chart. Source: TradingView
Separate data from TradingView shows the 30-year U.S. government bonds yield hitting 5% this week — a first since August 2007, before the Global Financial Crisis.
Continuing the discussion, Philip Swift, creator of statistics resource LookIntoBitcoin and co-founder of trading suite Decentrader, voiced his support for Hayes’ prognosis.
An accompanying chart showed Bitcoin’s relationship with treasury yields.
“That would be THE major catalyst for the Bitcoin bull market,” he commented about a theoretical return to money supply expansion.
Treasury yields vs. BTC/USD annotated chart. Source: Philip Swift/X
US debt sees its own "Uptober"
Alongside, the U.S. continues to add to its record-high national debt at an astonishing pace.
Two weeks after the debt tally passed $33 trillion for the first time, the government increased its total by $275 billion in just one day.
This did not go unnoticed among financial commentators.
Total US debt just rose $275 billion in one day—the same amount as last month's total borrowing.
— Joe Consorti ⚡ (@JoeConsorti) October 3, 2023
Yet —
• Unskilled military-aged foreign men are invading
• Violent criminals caught & released
• Open-air drug use
• American culture in shambles
The US doesn't work for you. pic.twitter.com/03YUxyiQtB
“In a single day, the US added more than half of Bitcoin’s entire market cap in debt,” Samson Mow, CEO of Bitcoin adoption firm Jan3, responded.
That’s something like 10 million BTC . And yet there are still people that are unsure if $27k is a good price to buy.
BTC/USD 1-hour chart. Source: TradingView
BTC/USD traded at around $27,500 at the time of writing.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Bitcoin Price Forecast: Analysts anticipate increased volatility as the US presidential election looms
Bitcoin price teased its all-time high of $73,777 last week but declined to trade below $69,000 on Monday. Analysts suggest that market volatility is expected to rise as the US presidential election approaches.
Litecoin poised for double-digit decline after breaking ascending trendline
Litecoin breaks and closes below an ascending trendline, signaling a change in market structure. On-chain metrics paint a bearish picture, as LTC’s dormant wallets are active, and the NPL indicator shows a negative spike.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP decline ahead of US elections
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all faced resistance at crucial levels ahead of the US Elections, leading to a price decline. As of Monday, they neared key support levels, and a firm close below these marks could signal further declines.
21Shares files S-1 for XRP ETF amid ongoing tension between Ripple and SEC
21Shares filed an S-1 registration with the Securities and Exchange Commission (SEC) on Friday for an XRP exchange-traded fund (ETF). While the chance of approval is slim with the current SEC administration, the landscape could change after the upcoming elections.
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.