Treasury yields to be catalyst for Bitcoin bull market

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Bitcoin could experience a bull market thanks to the U.S. Treasury yields, a brand new prediction says. Arthur Hayes, former CEO of crypto exchange BitMEX, has forecasted that the increase in U.S. Treasury yields may be a catalyst for the long-awaited crypto bull market.

In an X thread on Wednesday, October 4, Hayes explained that as the Treasury yields grow rapidly, a macroeconomic flashpoint is only a matter of time. The ballooning yields lead to what is known as a “bear steepener,” a phenomenon when long-term interest rates rise more quickly than short-term ones.

Bank models do not account for this phenomenon, according to Hayes. He noted that a worrisome pattern in the bond market has been taken as an indication that the Federal Reserve has to intervene and prop up the U.S. economy.

With 30-year Treasury note yields hitting five percent and the 2s20s curve rising, pressure across the economy is rising. Banks will be forced to sell bonds or pay a fixed rate to the IRS due to dangers to their portfolio. The outcome would be a return to heavy cash injections and resistance to the quantitative tightening that has influenced cryptocurrency markets since the end of 2021.

“The faster everyone recognizes that there is no other way but to print money to save the government bond markets, the more we will soon return to the cryptocurrency bull market,” Hayes said.

Continuing the discussion, Philip Swift, founder of LookIntoBitcoin and co-founder of trading suite Decentrader, voiced his support for Hayes’ prediction. According to him, a return to money supply expansion would be a major catalyst for the Bitcoin (BTC) bull market.

“@CryptoHayes views that such an event puts pressure on FED to turn money printers back on. I agree. That would be the major catalyst for the Bitcoin bull market,” he said.

U.S. debt continues to rise

In another development, the U.S. continues to accumulate record-high national debt at an alarming rate. The government increased the amount of debt by $275 billion in just one day, making its total debt $33.4 trillion.

The new debt equals more than half of the whole market capitalization of Bitcoin (BTC) at $535 billion. Goldman Sachs analysts predict that the cost of financing U.S. debt will set a new record in 2025. They attributed the increased cost associated with the U.S. debt load to the Fed interest rates during the past year.

“We estimate that debt as a share of GDP will rise from 96% to 123% over the next decade, driven primarily by a chronic deficit of around 3%,” they said.

“Although nominal GDP growth is likely to mostly offset the effect of higher interest costs on the debt-to-GDP ratio, the structural deficit will continue to add to public debt for the foreseeable future.”

Macro analyst Lyn Alden mentioned that the current debt number hasn’t been seen in nearly 80 years. The current economic situation plays out in Bitcoin’s favor, however. Alden explained Bitcoin tends to do well when the broad money supply denominated in dollars rises.