A new prediction claims that the U.S. government may be responsible for the reversal of Bitcoin’s (BTC) full-scale bull run.
in a X thread On October 4, Arthur Hayes, the former CEO of cryptocurrency exchange BitMEX, viewed ballooning yields as a harbinger of a new Bitcoin and cryptocurrency bull market.
Hayes: Bitcoin bulls should focus on U.S. ‘no way out’ moment
U.S. Treasury yields are “sharply moving higher,” and Hayes believes it’s only a matter of time before a macroeconomic outbreak occurs.
The reason is so-called “bear market steepening” – a phenomenon that describes long-term interest rates rising faster than short-term rates.
“Why do I like these markets now when yields are surging? Bank models have no concept of a bear market steepening occurring,” he argued.
Given the current sharp rise in the 2s30s curve (the difference between 30-year and 2-year yields), coupled with rising long-term and short-term interest rates, pressures are rising across the economy.
“Because banks have leverage and nonlinear risk in their portfolios, as interest rates rise, they will sell bonds or pay fixed IRS fees. More selling begets more selling, which is not good for bond prices. A good thing,” Hayes continued.
The results should be clear – massive liquidity injections are back, offsetting the quantitative tightening that has weighed on cryptocurrency markets since late 2021.
For Hayes, there was no way this would happen without significant casualties. He concluded:
“The faster the bear market steepens, the faster someone goes bankrupt, the faster everyone realizes there is no way out but printing money to save the government bond market, the faster we get back into a crypto bull market :). The Lord is my Shepherd and I will not be in want.”
Separate data trading view The yield on the 30-year U.S. Treasury note hit 5% this week for the first time since the global financial crisis began in August 2007.
Continuing the discussion, Philip Swift, creator of the statistical resource LookIntoBitcoin and co-founder of the trading suite Decentrader, expressed support for Hayes’ prediction.
The accompanying chart shows Bitcoin in relation to Treasury yields.
“This will be the main catalyst for the Bitcoin bull run,” he said commented A theoretical return to money supply expansion.
U.S. debt gets its own “Uptober”
At the same time, the U.S. national debt continues to increase at an alarming rate, reaching a record high.
Related: Bitcoin Analyst Still Predicts BTC Price to Plunge to $20,000
Two weeks after total debt exceeded $33 trillion for the first time, total government debt increased by $275 billion in just one day.
This has not gone unnoticed by financial commentators.
Total U.S. debt increased by $275 billion in one day, the same as total borrowing last month.
However –
• Unskilled foreign men of military age are invading
• Violent offenders caught and released
• Taking drugs in the open
• American culture is in chaosAmerica is not for you. pic.twitter.com/03YUxyiQtB
— Joe Consorti ⚡ (@JoeConsorti) October 3, 2023
Samson Mow, CEO of Bitcoin adoption company Jan3, said: “In one day, U.S. debt increased by more than half of Bitcoin’s entire market cap.” responded.
“That’s about 10 million Bitcoins. However, there are still people who are not sure whether $27,000 is an appropriate purchase price.”
As of this writing, BTC/USD is trading around $27,500.
This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should do their own research when making decisions.
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