Bitcoin’s (BTC) potential to flip to a full-blown bull run could come from the U.S. government, a new prediction claims.

In an Oct. 4 post on X, Arthur Hayes, former CEO of cryptocurrency exchange BitMEX, saw yield inflation as a precursor to a new Bitcoin and cryptocurrency bull run.

Hayes: Bitcoin bulls should focus on US' 'nowhere to go' moment

U.S. Treasury yields are "skyrocketing," so Hayes believes it's only a matter of time before a macroeconomic breaking point occurs.

The reason comes in the form of what’s known as a “bear steepener” — a phenomenon that describes long-term interest rates rising faster than short-term rates.

“Why do I like these markets now, when yields are surging? The bank models have no concept of when a bearish divergence occurs,” he argued.

Given the current sharp rise in the 2s30 curve - the difference between 30-year and 2-year yields - coupled with rising long- and short-term interest rates, pressure is rising across the economy.

“Because of the leverage and non-linear risk embedded in banks’ portfolios, as rates rise, they will sell bonds or pay fixed IRS. More selling, leads to more selling, which is not bueno for bond prices,” Hayes continued.

The result should be obvious - a resumption of massive liquidity injections, offsetting the quantitative tightening that has weighed on crypto markets since the end of 2021.

For Hayes, this could not have happened without significant casualties. He concluded:

“The faster this bear market steepens upwards, the faster someone gets angrier, and the faster everyone realizes there is no way out except printing money to save the government bond market, the faster we’ll be back in a crypto bull market :). The Lord is my shepherd, I won’t.

Separate data from TradingView showed that the yield on 30-year U.S. government bonds reached 5% this week for the first time since August 2007 before the global financial crisis.

Continuing the discussion, Philip Swift, creator of statistical resource LookIntoBitcoin and co-founder of trading suite Decentrader, expressed support for Hayes’ prediction.

The accompanying chart shows Bitcoin’s relationship to Treasury yields.

“This will be the main catalyst for a Bitcoin bull run,” he commented, referring to the theoretical return of money supply expansion.

US Debt Sees Its Own 'Uptober'

Meanwhile, the United States continues to add to its record high national debt at an alarming pace.

Related: Bitcoin Analyst Still Predicts BTC Price Plunge to $20K

Two weeks after the total debt surpassed $33 trillion for the first time, the government increased its total by $275 billion in just one day.

This has not gone unnoticed among financial commentators.

Total US debt just increased by $275 billion in one day, same as total borrowing last month. And yet -- • Unskilled military-age foreign men are invading • Violent criminals are being arrested and released • Open air drug use • US culture in disarray America is not for you. pic.twitter.com/03YUxyiQtB

— Joe Consorti ⚡ (@JoeConsorti) October 3, 2023

“In one day, the U.S. added more than half of Bitcoin’s entire market cap in debt,” responded Samson Mow, CEO of bitcoin adoption company Jan3.

“That’s about 10 million BTC. Yet, there are still people who are unsure if $27,000 is a good purchase price.

At the time of writing, BTC/USD is trading around $27,500.

This article does not contain investment advice or recommendations. Every investment and trading action involves risk, and readers should conduct their own research when making a decision.

Author: Deepchain DCNews

Compiled by: Sister Shen

Twitter: DeepChain

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