Curing government bonds, especially on the US Treasury, has traditionally been considered a headwind for Bitcoin (BTC) and other risk assets.

However, the recent sustained resilience in the Treasury Selects another story – a driven of factors that could be Bullish for Bitcoin, according to analysts.

The US data released on Tuesday showed that the consumer price index (CPI) increased 0.2% month to month for both the headline and the core in April, under the expected 0.3% readings. It resulted in a heading year for year-inflation reading of 2.3%, the lowest since February 2021.

Still, the prices of the 10-year-old Treasury dividend, which is affected by inflation, dropped higher to 4.5%, the highest since April 11, according to data source trading.

The so-called benchmark yield has risen by 30 base points in May alone, and the 30-year-old dividend has risen to 4.94%and sits near the highest levels in the last 18 years.

This has been late for late: the yield remains increased despite all the news about customs breaks, the US-China trade deal and slower inflation. (The 10-year dividend rose from 3.8% to 4.6% early last month when merchant stresses saw investors sell US assets)

Uptick in the so -called risk -free rate sparks usually fears of rotation of money out of stocks and other more risky investments such as crypto and in bonds.

Fiscal Splurge

However, the latest yielding wave stems from the expectations of continued fiscal expansion under President Donald Trump’s tenure, according to Spencer Hakimian, founder of Tolou Capital Management.

“Bonds on a weak CPI -Day tell [of] Fiscal expansion like crazy, “Hakimian said at X.” Everyone plays to win mid -way. Debt and deficit are cursed. It’s great for bitcoin, gold and stocks. It’s terrible for bonds. “

Hakimian explained that Trump’s tax plan would immediately add another $ 2.5 trillion to the tax deficit. In other words, fiscal policy under Trump is likely to be as expansion as under the bite, which acts as a wind of risk assets, including Bitcoin.

The details of the tax relief plan reported by Bloomberg early this week suggested $ 4 trillion in tax cuts and approx. 1.5 trillion dollars in expenses for cuts, corresponding to a fiscal expansion of $ 2.5 trillion.

Arif Husain, head of the global fixed income and chief investment manager for the regular income department of T. Rowe Price, noted that fiscal expansion will soon become the overall focus of the markets.

“Financial policy expansion can be growth -supporting, but most importantly, it will probably put even more pressure on the Ministry of Finance. I am now even more convinced that the 10 -year -old US Treasury will reach 6% in the next 12-18 months,” Husain said in a blog post.

Superb risk

Per Pseudonymous Observer Endgame-Macro, the sustained elevated Treasurers represent fiscal dominance, an idea that was first discussed by economist Russel Napier a few years ago and Maelstrom’s CIO and co-founder, Arthur Hayes, last year, and represents the US’s sleeping risk.

“When the bond market requires higher yields, even when inflation falls, it’s not about the inflation cycle, it’s about the very sustainability of American debt issuance,” Endgame Macro said at X.

The observer explained that higher yields create a self -reinforcing spiral with higher debt service prices that require more debt issues (more bond supply) and even higher rates. All this ends up increasing the risk of a superb debt crisis.

BTC, which is largely seen as an anti-establishment asset and an alternative investment vehicle, could get more value in this scenario.

As yield rises, the Fed and the US government could implement interest rate basket control or active purchase of bonds to enable the 10-year dividend from rising beyond a certain level, let’s assume 5%.

Fed is therefore obliged to buy more bonds each time the yield threatens to rise beyond 5%, which inadvertently increases the liquidity of the financial system that galvanizes the demand for assets such as Bitcoin, Gold and Shares.