FameEX Hot Topics | Global Bond Market Breakdown Could Trigger Bitcoin Rally

Bitcoin has surged to new highs as global financial markets grow increasingly unstable. Key drivers include soaring bond yields in both the U.S. and Japan, slowing global growth, and historically low consumer confidence in the U.S. These macroeconomic conditions, which once undermined Bitcoin’s value, are now supporting its rise. Investors appear to be reevaluating what constitutes a safe haven, signaling a major shift in how risk and capital preservation are being interpreted in today’s market climate.

Central to this change is the escalating U.S. debt crisis. America's national debt has now exceeded \$36.8 trillion, with interest payments projected to hit \$952 billion in 2025. As Treasury yields rise, the cost of servicing this debt becomes increasingly unsustainable. Long considered a benchmark of safety, U.S. government bonds are losing appeal. Investors are turning away from Treasurys and toward decentralized alternatives like Bitcoin, which are not tied to sovereign debt or inflation-prone currencies. The yield spike has effectively eroded the traditional safe-haven status of U.S. debt instruments.

President Trump has repeatedly prioritized lowering bond yields, yet the mechanisms for achieving this—rate cuts or renewed quantitative easing—rest with the Federal Reserve. Both measures carry inflationary risks, especially during a period marked by rising tariffs and persistent supply-side constraints. Even if Trump were to exert pressure on Fed Chair Jerome Powell, such political interference could backfire by shaking investor confidence and casting doubt on the Fed's independence. This risk adds yet another layer of uncertainty to traditional financial assets.

Investor sentiment is already precarious. The U.S. 30-year bond yield recently hit 5.15%, the highest since October 2023 and a level not seen since before the 2008 financial crisis. The yield curve has steepened sharply, with the spread between the 5-year and 30-year bonds reaching 1.00% for the first time since 2021. These developments point to expectations of long-term inflation and sustained high interest rates—factors that make fixed-income investments less attractive.

Simultaneously, Japan—the largest foreign holder of U.S. Treasurys—is experiencing its own bond market stress. The Bank of Japan’s rate hikes have pushed long-term yields to their highest in decades. Prime Minister Shigeru Ishiba has even compared Japan’s fiscal health to that of crisis-era Greece. Japanese institutional investors are now reassessing their U.S. bond exposure, further reducing demand for Treasurys and accelerating the global pivot toward assets like Bitcoin.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.