The government debt market has once again become the main source of concern for investors. Yields on long-term US and Japanese bonds have risen to levels that analysts call unsustainable for the budgets of major economies. Against this backdrop, BitMEX believes that bitcoin may receive one of the strongest long-term support factors.
Yields on US and Japanese government bonds from April 2024 to May 2026.
BitMEX senior analyst Shan Wu stated that central banks are trapped. They will have to choose between a rising risk of a debt crisis and further devaluation of national currencies. In such an environment, investors may increasingly look for assets with limited issuance, and bitcoin becomes the main candidate.
Bond Yields Reach Dangerous Levels
The yield on 30-year US Treasury bonds rose above 5.14%, while the yield on 10-year Japanese government bonds reached 2.8%. For markets, this is not just a technical move. It means an increase in the cost of servicing debt in economies where government obligations are already at historically high levels.
The situation is especially sensitive for the US. The country’s national debt has exceeded $39 trillion, and rising rates automatically increase the budget’s interest expenses. The higher the yields, the more money the government needs to allocate to servicing old debt instead of spending on the economy, defense, and social programs.
Central Banks Are Trapped
Usually, regulators raise rates to contain inflation. More expensive loans cool demand, reduce consumer and business activity, and also ease pressure on prices. But now this mechanism has become more dangerous for the states themselves.
If rates remain high for too long, debt servicing costs may begin to consume an ever-larger share of tax revenues. In such a scenario, fighting inflation turns into a risk of a budget crisis. That’s why analysts talk about a structural problem, not just temporary volatility.
According to Shan Wu, raising rates no longer fully solves the problem. It can only accelerate pressure on government finances.
Inflation and Geopolitics Worsen the Picture
Rising geopolitical spending creates an additional risk. The conflict around Iran is already keeping energy prices high, and expensive oil is fueling inflation. In such an environment, it is harder for central banks to quickly shift to rate cuts.
At the same time, governments are forced to spend more on defense, logistics, and economic support. This increases deficits and forces more debt issuance. The market, in turn, demands higher yields for buying new bonds.
It becomes a vicious circle. The more expensive the debt, the greater the burden on the budget. The greater the burden, the more investors doubt the sustainability of government finances.
Bitcoin Gets a Long-Term Argument
BitMEX believes that this very environment could become the foundation for a new bitcoin supercycle. The logic is simple: if investors begin to doubt the reliability of government debt instruments and currency stability, they look for assets that cannot be endlessly diluted by issuance.
Bitcoin here differs from bonds and fiat currencies. Its supply is limited, and the issuance rules are known in advance. Therefore, in times of rising debt burden, BTC is again seen as protection against monetary devaluation.
At the same time, the analyst warns that in the short term, movement may be chaotic. Rising yields and a strong dollar can put pressure on bitcoin in the moment. But in the long term, it is the crisis of confidence in the debt model that may become a powerful growth factor.
Market Awaits Stealth Policy Easing
Forecast of what the US annual budget will look like if bond yields suddenly rise to 7%.
Shan Wu and a number of macro analysts believe that authorities may try to support the debt market not by directly turning on the printing press, but by softer and less obvious methods. Possible tools include yield curve control, covert bond purchases, and other forms of adding liquidity.
Formally, this may not be called quantitative easing. But in essence, such measures will mean one thing: the government will have to inject liquidity into the system again to prevent a sharp rise in yields and debt stress.
For bitcoin, this is an important scenario. If markets see a return of liquidity, even in a hidden form, interest in BTC may increase.
Why This Matters for the Crypto Market
In recent months, bitcoin has often reacted to macroeconomics as a risk asset. Rising yields, a strong dollar, and hawkish Fed rhetoric have pressured the price. But if the debt problem becomes systemic, perceptions of BTC may change again.
Investors will begin to look at bitcoin not only as a speculative asset, but also as an alternative to debt and currency risks. This shift has already occurred in previous cycles, when fears of inflation and monetary dilution increased demand for assets with limited supply.
The difference is that now the market is much larger. There are ETFs, institutional infrastructure, and more participants who can quickly reallocate capital.
What’s Next?
The main question for the market now is whether the US and Japan can keep yields under control without direct central bank intervention. If pressure on the debt market continues to grow, talk of stealth policy easing will get louder.
For bitcoin, this creates a double picture. In the short term, high bond yields and an expensive dollar may limit growth. But in the long term, the government debt problem itself strengthens the main argument for BTC as an asset with limited issuance.
That’s why BitMEX analysts are talking not just about a local rally, but about a possible structural supercycle. If confidence in the debt model continues to decline, bitcoin could become one of the main beneficiaries of the new financial regime.
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