US Bond Market Is Flashing a Major Warning: Is This the Setup Bitcoin Was Built For?

Inflation is heating up again, as evidenced by the PPI data that came out on Thursday. Treasury yields are approaching 5%, and the US government is trying to stabilize the bond market while proposing another trillion-dollar stimulus program.

The immediate implications for bitcoin are bearish. However, the longer-term picture is considerably more complicated.

Bad For BTC (For Now)

August producer prices rose 5.4% year-over-year, which was just slightly over expectations. At the same time, Brent crude jumped past $100 this week as the situation in the Middle East sees no actual improvement and supply disruptions continue. The probability of a rate hike after the conclusion of the FOMC meeting on September 16 is over 70%, according to futures markets and some prediction platforms.

The 10-year Treasury yield climbed to just under 5%, despite the Treasury’s ongoing efforts to improve liquidity in long-dated government debt. Higher yields typically mean tighter financial conditions, a stronger incentive to hold relatively safe government debt, and, unfortunately for the bitcoin bulls, less appetite for speculative assets.

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