As President Donald Trump’s trade war threatens to upend the global economy, an interesting divergence has emerged that could potentially grease the bitcoin BTC bull run.
The divergence in consideration is the elevated yields on U.S. Treasury notes that threaten to compound the fiscal issues, and the renewed negative flip in yields on Swiss government bonds.
According to data source Investing.com, Swiss government bonds with maturities of up to five years offered negative yields at press time, with the two-year yield at -17.8 basis points. On the contrary, similar-duration Treasury notes offered yields over 4%.
The divergence is the bond market’s way of telling us that the trade war will have different impacts on various countries, depending on their trade profiles.
Those running trade surpluses, such as several European countries and China, will face disinflation or an outright deflation, while countries like the U.S., which import more than they export, will see an increase in price pressures.
The specter of deflation in European nations and China could put pressure on their central banks to ease monetary policy aggressively, likely leading to increased capital deployment into alternative investments like bitcoin. Both the Swiss National Bank and the European Central Bank have already cut rates in recent months.
Meanwhile, analysts have said that higher yields in the U.S. and the record public debt could accelerate the shift away from U.S. assets and into alternative assets.
“The last time this happened [Swiss yields turned negative in late 2019], it preceded coordinated global easing, repo market seizures, and ultimately pandemic-era QE. Now, it likely reflects a mix of deflationary pressure, eurozone contagion risks, and capital rotating into monetary sovereignty safe havens amid sovereign stress elsewhere,” pseudonymous analyst EndGame Macro said on X.
It’s worth noting that bitcoin’s 2020-2021 bull run from $5,000 to over $60,000 was characterized by a record amount of negative-yielding government debt worldwide.