Despite significant market discomfort and macroeconomic stress, Bitcoin’s price is currently experiencing a rise. The digital currency’s price is almost $110,000, which shows resilience even in problematic times, which rising global bond yields definitely are.
Other digital currencies might not perform well, with Ethereum being the finest example. Its price has changed by -5.60% in the last 24 hours, with a trading volume hovering at $14.28B – a great number showcasing that ETH still has people’s trust. That’s why ETH digital wallet providers are still seeing a surge in interest related to the number of downloads, as these apps are handy tools that let users manage their finances from one place (source: https://bestwallet.com/kr/ethereum-wallet/).
Other cryptocurrency worthy of mention is Dogecoin, which, even though it is 5% up from its week-ago value, is still seeing a -9% decrease from its 24-hour price. Therefore, one Dogecoin is worth $0.23 at the moment.
The conventional view of safe-haven assets changes
The latest changes in the world have completely shifted the notion of safe assets. These investments should come with low risk, and they should be highly unlikely to lose value during times of market uncertainty. Some of the best examples of these low-risk, low-return investments include cash, real estate property, and money market funds.
Until recently, government bonds were also considered to be a safe haven for investors; today, people would be much safer trusting Bitcoin with their wealth, as it comes with less uncertainty.
The stock market of the US isn’t the only one that’s signaling distress, as Japan has found itself in the same predicament. The bond markets of these two countries are showing clear signs of problems, resulting in decreased consumer confidence and a lowered demand for long-term sovereign debt.
This kind of unstable market is raising concerns regarding inflation and sustainability, which has people turning to other assets that are currently showing greater stability, such as Bitcoin. Even though the US inflation rate has significantly decreased since 2022, the moment when it reached its peak, Americans still find inflation to be one of their main financial problems.
The US shows signs of fiscal pressure and policy constraints
Inflation concerns in the US have paved the way for a rapid rise in yields. The current state of affairs shows that the 30-year Treasury yield is at its highest since 2023, as it currently sits at 5.15%. Meanwhile, the 10-year yield rose to 4.48%, which, among other things, is a result of greater government borrowing and various policy constraints.
It’s these constraints that have rendered the Federal Reserve unable to take measures that would ease these conditions, all without the impending doom that an inflation resurgence would be.
Inflation isn’t the only factor negatively affecting investor sentiment; the loss of the AAA credit rating is also to blame for people’s justified skepticism. Doubts regarding the country’s long-term fiscal stability have urged individuals to turn to gold and Bitcoin as their primary sources of investment.
That being said, some hope does linger, as the former and current US President Donald Trump has stated that lowering yields should be a key economic goal. Financial analysts aren’t too quick to agree, as they believe that the tools necessary for achieving this, such as rate cuts and quantitative easing, are risky for their potential to further fuel inflation, which is now under control.
Japan is in a similar predicament
Currently, Japan is the largest overseas holder of US Treasuries, so it’s no wonder that the country is also dealing with a concern regarding the debt that’s piling on. Just like in the US, the 30-year yield is at its height, reaching 3.1% – a percentage that hasn’t been seen in decades. This has been partially brought upon by the Bank of Japan, which has raised interest rates from -0.1% to -0.5%.
So far, Japanese investors have been largely in favor of the US bond markets, but the rapidly rising domestic yields might have them looking in the other direction. They, just like the US Treasury Committee, might start eyeing stablecoins, which are showing potential for reshaping the investment market.
Prime Minister Shigeru Ishiba’s words regarding Japan’s fiscal standing should give you an idea of how dire the country’s situation is. He issued a warning saying that Japan might be ‘worse than Greece’, a country that might be showing signs of growth at the moment but is still dealing with immense problems, including significant public debt.
The bottom line
Bitcoin, along with other digital assets, was once considered to be a risky investment, reserved only for the bravest of the bunch. Today, BTC has become one of the more stable cryptocurrencies, promoting it to a safe asset status.
Make no mistake – Bitcoin’s volatility can’t be so easily disregarded. Rapid and sudden price changes are still a characteristic of this crypto asset. What brings on people’s trust is the fact that, recently, there haven’t been any drastic changes that would put people’s investments in danger. Contrarily, traditional market uncertainty has produced financial setbacks for many individuals, opening up their minds to other forms of investments.
Today, Bitcoin is viewed as both a portfolio diversifier and a long-term investment. It’s also considered to be a potential hedge against inflation and volatility in fiat-operated markets. It should suffice to say that the worth of total assets under management has reached an all-time high, sitting at $104 billion.
If not sure, it’s best to start slow. Invest a portion of your money in Bitcoin and see how it goes. It’s fairly easy to work your way up and become a prominent BTC holder once you get sufficient experience.
