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Surging Bond Market Portends Another Bitcoin Bull Run

The bond market heated up last week as stocks began to tumble. As a result, Treasury yields (the coupon premium bondholders receive for buying a bond) are falling drastically.

That could be bullish news for Bitcoin price.

Bonds ended last week with the largest single-day point rise in 16 months as investors fled record Wall Street valuations. Historically, when market sentiment runs this way, a Bitcoin bull run is usually not far off.

Risk Off: U.S. Treasury Yields Dropping Fast

As Bitcoin price and stock markets across the globe bounce from one of the worst financial shocks in living memory, investors are piling into U.S. Treasury bonds for shelter.

Moreover, the odd inverted yield curve that has held up in bond markets for months flipped back in a worrisome sign that the economy could be about to slow down drastically.

James Athey, a portfolio manager at Marlborough Investment Management, said: “History says that when the curve moves back to a positive slope, you’re in a recession. The signals have been getting a bit more worrying for a while now.”

Jeremy Burton, a high-yield bond and leveraged loan portfolio manager at PineBridge Investments in New York City, said, “There are some people sitting on the sidelines now who think the economy is going to shift to a recession pretty soon.”

Real Vision Finance: Raoul Pal on Bond Markets

Government bonds represent one of the safest, surest means of predicting future cashflows, although they are not without risk due to the possibility of rising prices when the central bank inflates the currency.

The world’s original cryptocurrency, Bitcoin, offers investors a similar feature, although in a different way. Bitcoin’s design guarantees a fixed and predictable future supply of BTC on its network to participants who hold currency on its blockchain.

For that reason, retail Internet investors rapidly adopted and capitalized the cryptocurrency over its first decade of existence, a trend that appears to be accelerating after Bitcoin won approval for regulated exchanges in Bitcoin ETFs from the U.S. Securities and Exchange Commission earlier this year.

When markets need shelter from inflation, uncertainty in global equities, or other macro shocks, the same incentives that drive bond market rallies are at play in crypto exchange markets. That can have a drastic impact on Bitcoin prices.

As Real Vision Finance’s Raoul Pal explained during the 2022 bear market: “the bond market basically dictates the price of ALL risk assets.”

Postul Surging Bond Market Portends Another Bitcoin Bull Run a apărut prima dată pe CryptoPotato.


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