Bitcoin’s price is expected to sink as the global bond markets break – here’s why

Key takeaways:

• Raising bond produce reflects the growing concern about financial stability and inflation, leading some investors to question the traditional role of US treasury as a safe property.

• Bitcoin identifies conventional risk models, which rises not because of the worsening macro conditions, but perhaps because of them.

Bitcoin (Btc) ascend to New height amid a more fragile global macroeconomic backdrop. Bond yields reduce the US and Japan, global growth is surprising, and the consumer’s confidence in the US is the scraping of historical lows.

Paradoxically, the macro’s own conditions that once threatened bitcoin prices are now releasing its increase. The shift speaks to a broader change -how investors interpret the risk and where they are looking for shelter. In the midst of this realignment is the US debt crisis and the Ballooning Treasury’s yields, which are considered the safest ownership of the world.

Why is the US treasury so important?

When we are said the bond rise, the cost of serving its national debt is rising strongly – a critical issue provided that US debt has now exceeded $ 36.8 trillion, and interest payments are expected to be a total of $ 952 billion in 2025.

US president Donald Trump has made it clear on many occasions that the decline of the produce is among his leading economic priorities. However, this can prove more difficult than he expected, as the two most reliable methods to achieve it both need to come from the US Federal Reserve. Lowering interest rates will create newly issued bonds that are lower, making the existing higher yield bonds more attractive, pushing their price and lowering their effective yield. Another way is by the amount of easing (QE), where the Fed will buy large amounts of bonds in the open market, thus increasing demand and lowering of yields.

The Federal Reserve is currently fighting both techniques and careful strategies not to reign inflation, especially in the midst of the ongoing tariff war. Although Trump finds a legal or quasi-legal way to force feed chair Jerome Powell, it can backfire by eliminating investor confidence and making the opposite of the intended effect.

Investors do not appreciate the political interference in the US foundations and the global economy, and their confidence is fragile. In times of instability, investors have traditionally been locked in government bonds as a safe shelter. But now, the opposite is happening. Investors have turned away from Treasurys, suggesting US economic problems are huge to ignore. The recent loss of US government Last AAA credit rating is a strong confirmation.

The concerned yield climbing in the US and Japan

On May 22, the US 30-year bond harvest hit 5.15%-the highest since October 2023, and before that, a level has not been seen since July 2007. The 10-year harvest is now standing at 4.48%, the 5-year-old harvest at 4%, and the 2-year yield of 3.92%.

For the first time since October 2021, the US 5-year to 30-year bond spread was steep to 1.00%. This indicates the markets are pricing in stronger growth, ongoing inflation, and a “higher for longer” rates environment.

Related: Bitcoin’s price hits a new all-time high and data shows BTC bulls aren’t done yet

The combination of the problem is Japan, the largest foreign with the US Treasurys. Japanese investors are currently holding $ 1.13 trillion In the US government debt, $ 350 billion more than China. For decades, Japanese institutions have borrowed cheaply at home to invest in US bonds and stocks – a approach known as the carrying of trade.

This period may end. In March 2024, the Bank of Japan began interest rates from -0.1% to 0.5% today. Since April, the Japanese 30-year bond has raised 100 basic points, reaching a full time of 3.1%. The 20-year-old bonds have risen to 2.53%, a level that has not been seen since 1999.

On May 19, Prime Minister Shigeru Ishiba even warned Parliament of the country whose position of its government-owned government is “worse than Greece” —a shocking entry for a country with a 260% ratio of UT-to-GDP.

Interestingly, the climb to long-dated Japanese bonds did not match the shorter maturity. The 10-year bond yield is 1.53%, and the 5-year bond yield is only 1%. Number Reuters Noted, it suggests a strategic transfer of large Japanese pension and insurance funds while the Bank of Japan “normalizes” interest rates. These institutions can now re -evaluate the same risk to risk and exposure to foreign bonds, which results in potential problems for US treasurys if (or when) they begin to hear their handles.

Will the volatility bond on the price of bitcoin continue to affect?

As the US continues the debt spiral, and Japan may begin, the global economy is nowhere near recovery, and can be a great sign for Bitcoin.

Traditionally, increasing bond yields will drag the risk assets. But stocks and bitcoins continue to climb. The difference -this is suggesting investors can stay away from the traditional playbook. When confidence in the system removes, the properties out of it, such as stocks and bitcoins, begin to shine, even though they are considered dangerous-on.

What’s more, between the stocks of Bitcoin and the US, an increasing number of institutions to choose Bitcoin. As the Kobeissi letter noted, the net 38% of institutional investors have not weighed the US equality in early May, the lowest since May 2023, according to the Bofa.

Meanwhile, according to CoinglassThe total flow to the areas of Bitcoin ETF continues to grow, with property under management today of over $ 104 billion, a high time. This progress suggests that institutional capital is beginning to recognize Bitcoin not only as a high-performance property, but as a political neutral value store, similar to gold. During a time of mounting instability in debt-based economies, Bitcoin is emerging as a credible alternative, offering a financial-based financial and decentralization system. With a market cap fixed below $ 22 trillion of gold or even $ 5.5 trillion at the base dollar (excluding debt), Bitcoin remains significantly -undervalued.

Interestingly, the current situation supports the same narratives that co-agreed with Bitcoin: it acts as a high risk of risk and a safe value store. In a world where old frameworks failed, the dual role of bitcoin may no longer be an anomaly, but a sign of what’s coming.

This article does not contain investment advice or recommendations. Every transfer of investment and trading involves risk, and readers should conduct their own research when deciding.