pull down to refresh

To What Extent Is Bitcoin Responsible for Spiking Bond Yields?

136 sats \ 5 comments \ @spiderman 27 Aug bitcoin

So, I was reading how the bond yields of many developed economies (safe heaven assets) spiked recently, and was wondering if Bitcoin can be considered one of the causes?

If some of the capital considers Bitcoin to be the safe heaven, much safer than the locking your capital in the banking systems at the whims of individual nation states (who print money, freeze accounts or just refuse to pay whoever and whenever they wish, all with absolute impunity), can it have an impact on the market appetite for those papers?

But surprisingly, it seems emerging markets are not affected at all? Rather, the UK and France are warning about IMF bailouts.

view all related items

7 sats \ 2 replies \ @standardcrypto 27 Aug

lmmv: Q "what is total marketcap of long bonds (over 10 years) of g20 countries, in dollars?Just a quick ballpark answer, no analysis." A "$ 20 trillion"

bitcoin marketcap is $ 2 trillion, give or take, so 10%.

So if investors are selling well rated "high quality" long bonds for bitcoin, sure there could certainly be some impact. And I do in fact believe this is happening. The degree to which it is happening is debatable. But, the bigger bitcoin gets, the more it is happening -- that seems like a safe bet. Because just numerically, the bigger bitcoin is the more selling and switchover it can absorb.

It's further complicated by the unfortunate reality that we are in a "stealth capital controls" world, ie there are many holders of these "high quality" bonds that are trapped, they are legally required to hold them and can't sell for various reasons. Insurance companies, banks. Basel 2 and 3 "high quality liquid assets" for more on this.

But whatever, a trapped rat will chew off its leg to escape if it is desperate enough. So we'll see.

0 sats \ 1 reply \ @Solomonsatoshi 27 Aug

It is a lot bigger than $20 billion but otherwise your argument is sound. Bitcoin is increasingly appealing if as you note, you can access it, compared to the junk bonds the highly financialised western economies are now issuing. https://worldpopulationreview.com/country-rankings/bond-market-size-by-country

China has won the trade war - this is no secret now since China called Trumps bluff and threatened to cut supply of rare earths vital to US military and manufacturing supply chains- supply that the US cannot reasonably expect to duplicate for at least a decade and possibly never due to the chronic and systemic degrading of the wests industrial processing capacity and efficiency relative to China- it just cannot compete.

0 sats \ 0 replies \ @standardcrypto 27 Aug

Total global debt is (lmmv) around $100 trillion, I went a bit further down this rabithole. The LMMV is "this is from an LLM so YMMV. FWIW I regenerated the response several times and each time the numbers shuffled around a bit, while the overall pattern was somewhat stable. So fuck knows how accurate this is, but I'd say at least the question is posed properly and there is some hope that we are in the right ballpark.

LLMRESPONSE

Global Debt Breakdown (LMMV, GROK)

Category	Amount (trillion USD)
Medium term, high quality	25.5
Medium term, medium quality	20.6
Long term, high quality	20.4
Long term, medium quality	12.4
Short term, medium quality	8.2
Short term, high quality	5.1
Short term, low quality	3.1
Medium term, low quality	3.1
Long term, low quality	1.6
Total	100

Definitions:

Short term: under 1 year
Medium term: 1 to 10 years
Long term: over 10 years
Low quality: countries with credit ratings BB+ and below (e.g., Venezuela, Argentina)
Medium quality: countries with credit ratings A+ to BBB- (e.g., Greece, Italy)
High quality: countries with credit ratings AAA to AA- (e.g., US, Switzerland)

LLMQUERY

Please help me produce a table. 

title is "Global Debt Breakdown (LMMV, GROK)"
format is markdown, suitable for pasting into an internet forum. 
(Note to self, plan is to paste to 
https://stacker.news/items/1196045
"To What Extent Is Bitcoin Responsible for Spiking Bond Yields?)

3 Columns: Term, Quality, MarketCap (USD Trilion)

There should be nine rows. This is a combination of tuples:   
  (short term, medium term, long term)   
  (low quality, medium quality, high quality)
 
eg
  short term is under a year, medium term is 1 to 10 years, long term is over 10 years.
  low quality is shitty countries like venezuela that no one trusts, medium term is countries like greece that are like bad but maybe they will pay, high quality is countries like the US and switzerland, where it's like, yeah if it's not the zombie apocalypse they will pay.
 both segmentations should add up to 100%.
  ie, low + medium + long term should add up to all the debt, and low + medium + high quality should also add up to all the debt. so with the segmentation, the 9 rows should add up to all the debt.
 
  You can define the terms differently if that makes this task easier, but give the definition below the table so it's clear (either way -- ie, even if you don't define it differently, give it under the chart.)
 
It should be reverse sorted by amount. (so highest amount at the top)
And there should be a total at the bottom.

Bonus Rabbithole...

LLM QUERY

It's kind of a weird coincidence that the total is exactly $100 trillion.
Does this make you doubt the result in any way?
Can you think of anything to sanity check the analysis so far?
Don't actually do the sanity check, just brainstorm things you could potentially sanity check.

response omitted.

0 sats \ 0 replies \ @Solomonsatoshi 27 Aug

The old industrial western powers cannot compete with Chinas manufacturing efficiency. They have relied on financial trickery (printing money) so far but its not going to work much longer.

The developing nations are faring much better from Chinas rise as they export more commodities which China pays a better price for and import more manufactured goods which again China offers at a much better price. The legacy imperialists of the west have lost the trade war with China and their insolvency is imminent. Bitcoin is certainly a minor threat to their increasingly undesirable Treasury Bonds but its not a significant threat- the real threat comes from the chronic decline in the ability of these previously industrialised economies to compete with China.

Trump at least understands this much and is trying to use tariffs to bolster US fiscal and stimulate US industrial sectors but its not a realistic strategy more than short term damage control. China has already called Trumps bluff and threatened to cut supply of rare earths reducing Trump to begging for a restoration of supply.

China has won the trade war.

0 sats \ 0 replies \ @Oxy 27 Aug

Bitcoin has shown a low or negative correlation with traditional assets like stocks and bonds. This has led some to see it as a good tool for portfolio diversification, but not necessarily as a safe haven.