Real Rates Under Pressure: The Scenario That Could Propel Bitcoin

Unprecedented Pressure on Real Rates

Global bond markets are experiencing sustained tension. According to analysis by Stephen Coltman, macro head at 21Shares, the uniqueness of the current sequence lies in the nature of rising yields. This increase is primarily occurring in real terms, rather than through higher inflation expectations.

Nominal yields on 10-year U.S. Treasuries have risen by about 70 basis points, a movement closely followed by inflation-indexed bonds (TIPS). Thus, a structural phenomenon is at play, beyond mere reactions to economic publications.

Several factors are sustaining this dynamic. High oil prices, colossal financing needs related to the development of artificial intelligence, and persistent budget deficits all contribute in the same direction. They alter the balance between the supply and demand for savings in favor of higher real rates.

Bessent and the Strategy to Suppress Yields

In the face of this pressure, Scott Bessent, U.S. Treasury Secretary, has begun to intervene. 21Shares sees this as a significant signal: The U.S. administration will not hesitate to act to try to lower yields as midterm elections approach, even if current measures are deemed insufficient.

The mechanism is as follows: The Treasury buys long-term bonds and finances these purchases by issuing short-term bills. In practice, this operation closely resembles a classic quantitative easing conducted by the Fed, where asset purchases are financed by bank reserves.

The market reacted immediately. Transactions related to the theme of currency depreciation surged after the Treasury's intervention on August 19, identified by 21Shares as a major catalyst for Bitcoin.

Bitcoin Captures Institutional Appetite

In this context, Bitcoin (BTC) shows remarkable resilience while traditional risk assets struggle to find direction. Investors anticipate new measures aimed at suppressing yields and weakening the dollar, reinforcing the narrative of the king of crypto as a hedge against currency depreciation.

August confirmed this. The global crypto ETF market recorded its best month of the year in terms of inflows, with $6.1 billion in net entries. Bitcoin posted a monthly performance of 24%, its best streak since November 2024.

At the time of writing, Bitcoin is trading around $77,154, down 0.94% over 24 hours but still up 23.80% over thirty days. The total market capitalization of BTC exceeds $1.55 trillion.

What to Watch This Week

21Shares identifies several points of vigilance for the coming days. The dynamics of global real rates remain central to the game, as do the persistent tensions in the bond market. Non-farm payroll (NFP) data and U.S. employment figures will directly influence expectations for rate cuts.

Potential new interventions from Scott Bessent are also being closely monitored. 21Shares expects the Treasury to step up in the coming weeks, with operations of a more significant scale than those already announced.

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