Bond Yields Are Skyrocketing! And Bitcoin’s About to Join the Party

What You Should Probably Know:

Okay, so here’s the thing. High government bond yields have always been like the dark clouds over Bitcoin’s shiny little world. But wait! It seems like things are flipping, and now—brace yourself—it might actually be *good* for Bitcoin. Shocking, we know.

Let’s break it down: US data released Tuesday showed that the consumer price index (CPI) only went up by 0.2% in April (well below the 0.3% forecast), which, by the way, gives us an annual inflation rate of just 2.3%—the lowest since 2021! So far, so good. But, surprise—yields on the 10-year Treasury note are climbing, and not in a cute way. We’re talking 4.5%—the highest since April. *Exciting?* Definitely.

Also, fun fact: This yield surge has been happening for months, despite news about trade pauses, U.S.-China deal chatter, and slower inflation (remember when the 10-year yield shot up from 3.8% to 4.6% last month? Yeah, that happened).

The uptick in these “risk-free” bonds usually freaks people out because it usually signals money running away from stocks and crypto. But guess what? It’s Bitcoin’s time to shine. Sort of like when the cool kid at school suddenly decides you’re interesting. Weird, but true.

The Fiscal Fun House

Now, let’s talk about why this bond surge is actually kind of fantastic for Bitcoin. Turns out, we can thank President Trump and his *fiscally-expansive* tax plans. Yes, *that* Trump. According to Spencer Hakimian, genius behind Tolou Capital, bond prices are plummeting because the U.S. is splurging like it’s Black Friday. The government’s in full-on debt mode. Tax cuts? Check. $2.5 trillion added to the deficit? Double-check. It’s a boom for risk assets like, you guessed it, Bitcoin!

And just in case you thought we were kidding, a Bloomberg report confirms a mind-blowing $4 trillion in tax cuts. But hey, don’t get too excited, because that’s also a $1.5 trillion spending cut (equally confusing, right?).

But wait—there’s more! Arif Husain from T. Rowe Price thinks that all this spending is going to push the 10-year Treasury yield to a staggering 6% in the next 12-18 months. Because why not, right?

Sovereign What?

Here’s where things get even juicier. Persistent, elevated Treasury yields aren’t just about inflation anymore—they’re about the sustainability of the U.S. debt. Basically, it’s like the U.S. is saying, “Hey, we’ll keep borrowing and borrowing, and hope the bond market doesn’t mind.” A brilliant plan, right?

This constant increase in yields could set off a chain reaction of higher debt servicing costs, more debt issuance, and… yep, you guessed it—higher rates. The bond market might just trigger a sovereign debt crisis. And in this world of debt-induced chaos, Bitcoin could become the hero (because who doesn’t love a plot twist?).

But that’s not all, folks. If things get too crazy, the Fed might start buying bonds like a shopping spree, capping the 10-year yield at, let’s say, 5%. That’s right, the Fed might actually be the one to save Bitcoin’s day, pumping up liquidity and giving a boost to assets like Bitcoin, gold, and… stocks? Oh my!

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2025-05-14 16:36