US Debt and Treasury Yields Devour Entire Federal Tax Revenue...BitMEX "Bitcoin Supercycle is Coming"

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The global financial market is experiencing a confluence of soaring government debt and surging Treasury yields. As the depreciation of fiat currency becomes inevitable, it has been argued that Bitcoin (BTC), with its inflation-resistant capabilities, will enter a long-term supercycle.

According to Cointelegraph, a cryptocurrency specialized media outlet, on May 25 (local time), Shang Wu, a senior research analyst at virtual asset exchange BitMEX, diagnosed the recent rise in Treasury yields as a signal of a structural shift. He analyzed that investors seeking to avoid asset depreciation would flow in, leading to a long-term rise in Bitcoin. Wu pointed out that the US 30-year Treasury yield surpassed 5.14% on Tuesday, and the Bank of Japan's 10-year Treasury yield also reached 2.8%. Yields at this level are unsustainable in the long term, and governments worldwide face a situation where they must either devalue their currencies or face a sovereign debt collapse.

Wu stated, "Central banks are backed into a corner," adding, "They must choose between sovereign debt collapse and currency devaluation." He also added, "For Bitcoin, the upcoming volatility may be confusing in the short term, but it will act as the ultimate structural tailwind driving a long-term supercycle." The situation is exacerbated by the US national debt exceeding $39 trillion and concerns about accelerating government spending due to heightened geopolitical tensions. An environment where energy prices surge due to a war with Iran, leading to an inflation spike, also supports this argument. Bitcoin prices also rebounded as President Trump prepared to announce a deal with Iran through negotiations.

Central banks typically use high yields to curb inflation by restricting access to credit. This is because increased borrowing costs lead consumers and investors to reduce borrowing, causing asset prices to fall. However, Wu points out that controlling inflation through interest rate hikes is impossible due to the ever-growing US national debt of $39 trillion, fueled by deficit spending. This is because higher interest rates also increase the government's debt service costs. Wu warned, "With a national debt of $39 trillion, maintaining interest rates at this level will soon cause the government's annual interest expenses to consume the entire federal tax revenue base."

Experts like Wu and macroeconomist Lyn Alden anticipate that governments and central banks will resort to methods such as yield curve control or unannounced purchases of US Treasury bonds. The observation is that they will attempt to subtly conceal quantitative easing measures by supplying liquidity through other channels. Consequently, as the cracks in the Treasury market and the decline in confidence in fiat currencies deepen, the relative value of Bitcoin, whose supply cannot be arbitrarily increased, will experience long-term upward pressure.

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