- A Bitmex analyst argues surging sovereign bond yields will force a “structural” shift, creating a long-term Bitcoin bull market.
- High yields are unsustainable and will corner central banks into choosing between sovereign debt collapse or currency debasement.
- The United States‘ massive national debt of $39 trillion makes fighting inflation with rate hikes unfeasible.
- These conditions serve as an “ultimate structural tailwind” for Bitcoin as a non-inflationary asset, according to the analyst.
A senior research analyst at crypto exchange BitMEX predicts that skyrocketing government bond yields will create a “structural” tailwind for a Bitcoin supercycle. Shang Wu made this claim in a recent blog post, pointing to unsustainable yields in the United States and Japan.
The yield on the 30-year US Treasury recently broke past 5.14%, while Japan’s 10-year government bond touched 2.8%. Wu stated these levels cannot last and will force a critical choice. Governments must decide between a sovereign debt collapse or debasing their currencies.
Consequently, the US government’s massive $39 trillion national debt makes traditional inflation-fighting tools ineffective. Raising interest rates to lower inflation would drastically increase the government’s own debt servicing costs. According to Wu, “With 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.”
The analysis coincides with a national debt crossing $39 trillion and geopolitical tensions threatening more government spending. Ongoing conflict in Iran is also causing energy price surges and inflation spikes.
Therefore, the coming volatility will be chaotic short-term but beneficial long-term for Bitcoin. Wu concluded, “For Bitcoin, the upcoming volatility will be chaotic in the short term, but it serves as the ultimate structural tailwind for a long-term supercycle.”
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