Following US President Biden's latest speech, Bitcoin and gold experienced a significant rally, coinciding with an aggressive sell-off in long-term US Treasury bonds, according to a statement by BitMEX former CEO Arthur Hayes.
US Treasury Bonds Fall, Bitcoin Increases
Arthur Hayes stated that Bitcoin was relatively unaffected at the beginning of the Hamas-Israel conflict. However, it has since risen sharply, pushing Bitcoin above $30,000 as U.S. Treasury yields rise.
According to Hayes, neither gold nor Bitcoin provide any interest income. Therefore, Hayes argues that their simultaneous rise during a period of rising U.S. Treasury yields suggests a future for these safe-haven assets with rising government spending and inflation.
Since the Fed's meeting on September 20, long-term US Treasury bonds (TLT) are down 11%, while Bitcoin is up 11% and gold is up a modest 1%.
According to the BitMEX founder, this trend corresponds to the market's concerns about inflation rather than growth and explains why Bitcoin and gold are rising along with long-term returns.
If long-term U.S. Treasury bonds fail to provide confidence for investors, interest in alternative assets such as gold and Bitcoin could increase, especially as fears of global wartime inflation grow, according to Hayes.
Recently, Bitcoin had surged above $30,000 due to false rumors that the US Securities and Exchange Commission had approved the Blackrock spot Bitcoin ETF. However, when these rumors were debunked, it quickly dropped to $27,000.
Hayes predicts that once bond yields get too high, the Fed will abandon its claim that the U.S. Treasury market is a free market.
*This is not investment advice.