Hayes Foresees U.S. Yield Spike Indicating Bitcoin Upswing

In a recent thread on October 4th, ex-BitMEX CEO Arthur Hayes interprets the surge in U.S. yields as a sign of an impending Bitcoin and cryptocurrency bull market.

With U.S. Treasury yields “soaring,” Hayes envisions an imminent macroeconomic turning point. The current situation can be characterized by a “bear steepener,” which refers to the more rapid increase in long-term interest rates compared to the short-term ones.

Hayes stated, “In the face of rocketing yields, why am I still optimistic about these markets? Traditional banking models are unprepared for a bear steepener.”

He highlighted the sharp incline in the 2s30s curve (the gap between the two-year and 30-year yields). As both long-term and short-term interest rates are on the ascent, economic tension grows.

“Given the inherent risks and leverage in banks’ assets, they’ll likely resort to selling bonds or fixing the IRS as rates climb. This selling leads to even more selling, detrimental for bond values,” he explained.

Hayes predicts the outcome to be a revival of massive liquidity influxes, offsetting the quantitative tightening observed since the end of 2021, which affected the crypto space.

However, he cautioned that this transition wouldn’t be smooth. He summarized his view, “The quicker this bear steepener surges, the sooner a player faces collapse, the sooner it becomes evident that monetary printing is the only bailout for government bond markets, thus leading to a resurgent crypto bull phase. The Lord is my Shepherd; I shall not want.”

As per TradingView data, this week witnessed 30-year U.S. government bond yields reaching 5%, a landmark last seen prior to the 2007 Global Financial Crisis.

Supporting Hayes’ assessment, Philip Swift, LookIntoBitcoin statistician and DecenTrader co-founder, highlighted Bitcoin’s interplay with Treasury yields.

Swift remarked on the potential return to expanding the money supply, “Such a move could be the primary trigger for Bitcoin’s bull run.”

Meanwhile, the U.S. continues to amass national debt at an alarming rate. Within two weeks of surpassing the $33 trillion mark, the nation piled on an additional $275 billion in a single day.

Financial observers were quick to comment. Samson Mow, CEO of Bitcoin advocacy firm Jan3, noted, “In just one day, the U.S. accumulated debt equivalent to over half of Bitcoin’s total market cap.”

He added, “That’s nearly 10 million BTC. And still, some wonder if $27k is a sensible Bitcoin purchase price.”