- Bitcoin’s price has surged this week due to macroeconomic forces like aggressive selling of US Treasuries rather than just excitement over a Bitcoin ETF.
- Treasuries are being sold off because the Fed is nearing the end of its rate hike cycle and President Biden called for more overseas war spending, raising doubts about the government’s spending capacity.
- The rally in Bitcoin and gold while yields spike indicates investors are rotating out of bonds into alternative safe havens, prompting crypto analyst Arthur Hayes to recommend rotating out of Treasuries and into crypto.
Bitcoin has seen a considerable price surge this week, leaving many in the crypto community wondering what’s behind the rally. According to crypto analyst Arthur Hayes, there’s more at play than just excitement over a potential Bitcoin ETF.
The Macroeconomic Factors Driving Bitcoin Higher
In his latest market commentary, Hayes argues that Bitcoin is reacting to broader macroeconomic forces, namely the aggressive selling of US Treasuries. As Hayes explains, bonds are being sold off for two key reasons:
- The Federal Reserve signaling it’s nearing the end of its rate hike cycle, eliminating incentives to hold long-term bonds
- President Biden’s call for Congress to fund more overseas conflicts totaling $105 billion, raising doubts about the government’s capacity to fund wars and other spending
This bond sell-off has driven investors towards alternative safe haven assets like gold and Bitcoin instead. The rally in both gold and Bitcoin while yields spike indicates these assets are “discounting a future of more government spending and more inflation,” says Hayes.
Time to Rotate Out of Bonds and Into Crypto
Hayes has long advocated holding short-term US Treasuries while waiting for a definitive signal to rotate back into Bitcoin. With Biden’s commitment to prolonged overseas conflicts, Hayes now sees that return trigger.
As Hayes concludes, “It’s time to start rotating out of short-term US Treasury bills and into crypto. The perfect setup is usually staring you right in the face and you are just too preoccupied with the past to notice.”