Bitcoin (BTC) could experience a significant bull market thanks to the United States government, according to a new prediction by Arthur Hayes, the former CEO of crypto exchange BitMEX. In a Twitter thread on October 4, Hayes pointed to the ballooning treasury yields as a precursor to a new Bitcoin and crypto bull market.
Hayes believes that a macroeconomic flashpoint is imminent as U.S. treasury yields are “screaming higher.” This trend is commonly referred to as a “bear steepener,” where long-term interest rates rise more quickly than short-term rates. He argued that bank models cannot account for a bear steepener occurring and this presents an opportunity for Bitcoin bulls.
The current steep rise in the 2s30s curve, which represents the difference between the 30-year and 2-year yields, coupled with the increasing long and short-term interest rates, is putting pressure on the economy. Hayes predicts that due to the leverage and non-linear risks embedded in banks’ portfolios, they will be forced to sell bonds or pay fixed on interest rate swaps as rates rise. This selling pressure will negatively impact bond prices and potentially lead to a return to mass liquidity injections, which would counteract the quantitative tightening that has been affecting the crypto markets since late 2021.
Hayes acknowledges that this transition to a crypto bull market will come with major casualties along the way. However, he firmly believes that the faster this bear steepener rises and the more people go “belly up,” the quicker everyone will recognize that the only way out is through money printing to save the government bond markets.
Data from TradingView shows that the 30-year U.S. government bonds yield hit 5% this week, the first time since August 2007 before the Global Financial Crisis. Philip Swift, the creator of statistics resource LookIntoBitcoin, and co-founder of trading suite Decentrader, supports Hayes’ prognosis. He believes that a return to money supply expansion would be the major catalyst for the Bitcoin bull market.
In addition to rising treasury yields, the United States continues to add to its record-high national debt at an astonishing pace. Just two weeks after the debt surpassed $33 trillion for the first time, the government increased its total by $275 billion in a single day. This alarming increase did not go unnoticed among financial commentators, with Samson Mow, CEO of Bitcoin adoption firm Jan3, stating that the US added more than half of Bitcoin’s entire market capitalization in debt in just one day.
Despite these economic indicators, Bitcoin is currently trading at around $27,500. However, it is important to note that this article does not contain investment advice or recommendations, and every investment and trading move involves risk. Readers should conduct their own research and make informed decisions.
In conclusion, Arthur Hayes predicts that the United States government’s actions, such as the bear steepener and the rising national debt, will eventually lead to a return of the crypto bull market and benefit Bitcoin and other cryptocurrencies. However, the road to this bull market may come with significant casualties and challenges along the way. Investors should carefully analyze these factors and consider their own risk tolerance before making any investment decisions.