Rising government bond yields signal a coming \u201cstructural\u201d shift that will create a Bitcoin \u201csupercycle\u201d of rising prices, as investors flee debasing assets for one that cannot be inflated, according to Shang Wu, a senior research analyst at crypto exchange BitMEX.<\/p>\n
The yield on the 30-year US Treasury broke past 5.14% on Tuesday, while the Bank of Japan\u2019s 10-year government bond yield touched 2.8%, Wu said<\/a>. <\/p>\n These yields are unsustainable in the long-term and will force governments to choose between debasing their currencies<\/a> and a \u201csovereign debt collapse,\u201d Wu said.<\/p>\n Bond yields for US and Japanese government debt from April 2024 to May 2026. Source: <\/em>BitMEX<\/em><\/a><\/p>\n \u201cCentral banks are backed into a corner. They must choose between a sovereign debt collapse and debasing their currencies,\u201d Wu said. According to the analyst:<\/p>\n \u201cFor Bitcoin, the upcoming volatility will be chaotic in the short term, but it serves as the ultimate structural tailwind for a long-term supercycle.\u201d <\/p><\/blockquote>\n The analysis comes as the US national debt<\/a> crosses $39 trillion, and growing geopolitical tensions<\/a> threaten to boost government spending, while the ongoing war in Iran causes a surge in energy prices<\/a> and a corresponding inflationary spike.<\/p>\n Related: <\/strong><\/em>Bitcoin bounces as Trump prepares to announce \u2018negotiated\u2019 Iran deal<\/strong><\/em><\/a><\/p>\n Central banks typically use higher yields to tamp down inflation by restricting access to credit; when borrowing costs are high, consumers and investors borrow less, and asset prices fall.<\/p>\n However, the $39 trillion US national debt, which continues to grow due to deficit spending, makes it impossible to control inflation by raising interest rates, as the higher rates would also increase the government\u2019s debt servicing costs, Wu said.<\/p>\n A forecast of what the annual US budget would look like if bond yields spike to 7%. Source:<\/em> BitMEX<\/em><\/a><\/p>\n \u201cWith the national debt at $39 trillion, keeping rates at these levels means the annualized interest expense of the government will soon consume the entire federal tax base,\u201d according to the analyst.<\/p>\n Wu and others, including macroeconomist Lyn Alden, say that the government and central banks will attempt to disguise quantitative easing<\/a> by adding liquidity through other methods like yield curve control and unannounced buybacks of US government debt.\u00a0\u00a0<\/p>\nRate hike won\u2019t solve problem, it will simply bankrupt the government<\/h2>\n
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