Rising Treasury Yields Could Spark Bitcoin Supercycle

Shang Wu, a senior research analyst at BitMEX, warned rising government bond yields could force governments to either debase their currencies or face sovereign debt stress. On Tuesday the 30-year U.S. Treasury yield topped 5.14% and Japan’s 10-year reached 2.8%.

Wu highlighted bond-yield movements between April 2024 and May 2026 and described those levels as unsustainable for major economies. He pointed to the U.S. national debt, which has passed $39 trillion, and to geopolitical tensions that have pushed up energy prices and could raise inflation and borrowing costs.

Central banks typically raise interest rates to slow inflation by making credit more expensive, which reduces consumer and corporate borrowing and eases pressure on asset prices. Wu noted higher policy rates also increase the government’s debt-service burden, constraining that response.

BitMEX’s analysis showed that if long-term yields rose to 7%, annualized interest payments could consume the federal tax base. The forecast presented a scenario in which higher yields add substantially to the government’s budgetary strain.

Wu and some analysts, including macroeconomist Lyn Alden, expect authorities to use other liquidity tools instead of explicit quantitative easing. Measures cited include yield curve control and unannounced purchases of government bonds.

In a note, Wu wrote, “Central banks are backed into a corner. They must choose between a sovereign debt collapse and debasing their currencies.” He also wrote, “For Bitcoin, the upcoming volatility will be chaotic in the short term, but it serves as the ultimate structural tailwind for a long-term supercycle.”

The analysis was published as higher energy costs tied to conflict in the Middle East and rising defense spending could widen budget deficits. The note said how policymakers respond to rising yields will affect bond markets and demand for alternative stores of value.