What to know:
- A divergence in bond yields has emerged, with U.S. Treasury notes offering elevated yields and Swiss government bonds showing negative yields.
- China and a number of European nations, which run trade surpluses, may face deflation, prompting central banks to ease monetary policy, potentially boosting bitcoin investment.
- Higher U.S. yields amid record public debt could lead to a shift from U.S. assets to alternatives like bitcoin.
Amidst President Donald Trump’s escalating trade wars, which pose a significant risk to the world economy, an intriguing discrepancy has arisen that might foster increased adoption of Bitcoin.
bull run.
The significant increase in returns on U.S. Treasury bonds, which could exacerbate existing fiscal problems, and the recent reversal leading to negative yields on Swiss government bonds are the aspects under focus.
At the current moment, as reported by Investing.com, Swiss government bonds maturing within five years are providing negative returns. Specifically, the two-year bond has a yield of -0.178%, while comparable U.S. Treasury bonds with similar durations offer yields above 4%.
The divergence indicates that each nation may experience distinct effects from the trade war based on their unique trading relationships.
Countries that have a trade surplus, such as numerous European nations and China, may experience disinflation or even deflation, whereas countries like the United States, which tend to import more goods than they export, could encounter rising inflationary pressures.
In simple terms, the possibility of deflation in European countries and China might prompt their central banks to loosen monetary policies significantly, potentially causing an uptick in investment in alternatives such as Bitcoin. Already, institutions like the Swiss National Bank and the European Central Bank have reduced interest rates over the past few months.
In simple terms, experts are predicting that increased returns in the U.S. and high levels of public debt might prompt investors to move their funds from American assets towards other investment options instead.
In simple terms, as was the case when Swiss yields turned negative at the end of 2019, this situation could be a precursor to collective monetary easing, market freezes in the repo sector, and eventually quantitative easing reminiscent of the pandemic era. The current state might be due to factors such as price deflation, potential contagion risks within the eurozone, and capital flowing towards safe-havens that offer monetary sovereignty, given financial stress elsewhere, according to EndGame Macro’s analysis.
It’s important to highlight that the significant increase in Bitcoin’s value from around $5,000 to more than $60,000 between 2020 and 2021 occurred alongside a historic high in negative-yielding government bonds globally.
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2025-06-10 20:16