Transferred
By: Omkar Godbole – CoinDesk
Publication Date: May 20, 2025
U.S. financial markets are experiencing significant changes, as investors begin to lose confidence in the stability of the U.S. financial situation, resembling what is known in the wrestling world as 'kayfabe', which refers to the representation or illusion believed by the audience, despite being untrue.
Key Points:
Inflation-protected bond yields are rising sharply: Yields on Treasury Inflation-Protected Securities (TIPS) have reached their highest levels since 2001, indicating that investors are seeking a higher compensation for lending to the U.S. government due to concerns over its fiscal policy, not because of inflation.
The dollar is losing its traditional correlation with bonds: The usual relationship between rising yields and a strong dollar has broken down, as the euro has risen against the dollar despite the bond yield differential not justifying it. This suggests that investors are moving away from U.S. assets.
Bitcoin and gold as safe havens: With the expected U.S. debt rising to 156% of GDP by 2055, analysts like Paul Tudor Jones and Arthur Hayes expect the government to resort to printing more money to address the crisis, driving investors to seek valuable assets like gold and Bitcoin.
Market Signals: The Bond Volatility Index (MOVE) remains in a downward trend, indicating that things are not out of control yet. However, if bond volatility rises sharply, a temporary collapse in all assets, including Bitcoin, may occur.
Summary:
The U.S. financial situation is facing increasing skepticism from the markets, enhancing the position of Bitcoin and gold as safe havens. With expectations of more monetary easing and money printing, gold and Bitcoin may witness a new upward wave – albeit not without volatility.