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30-year US Treasury yield hits 3%
Recently, the US 30-year Treasury yield topped 3% as the all-maturity Treasury market and broader credit markets continue to sell off.
12-hour yields for various US Treasury bonds
The rise in yields has resulted in much higher volatility in bond markets and significant losses for investors. The iShares 20-Year Treasury Bond ETF, TLT, which tracks a long-dated index, is now down over 30% from its all-time high set in July 2020. The recent drawdown is the fastest deceleration over a 30-day percentage change since May 2009.
For comparison, Bitcoin is only about 39% below its all-time high. So much for long-dated US Treasuries, which offer low volatility, portfolio hedging performance, and “risk-free” interest rates.
iShares Treasury Bond ETF drawdown is around 30%
Bitcoin’s drop from all-time highs is around 39%
When assessing the performance of bitcoin and debt securities, it is important to keep in mind the long-term prospects of the global economic system.
Given the reality of a historical debt burden that worsened after the COVID-19 economic lockdowns, followed by the historical stimulus that followed, debt as an asset class promised no-return risk. Debt is not just an agreement between borrower and lender, it underpins the entire financial system as a liquid asset class (the largest at that) in the global economy.
Given that around $100 trillion worth of loans promise no-return risk (not to mention the assets valued due to historically negative real interest rates: stocks, real estate, etc.), our case was repeatedly the perfect asset The theory to hold at this stage of a long-term debt cycle is one with no counterparty risk and no risk of dilution.
With the advent of the Bitcoin network in 2009, theory met reality.
Now, as the entire investing world works to figure out how to outperform the historic inflationary regime we are facing today, Bitcoin stands, which continues to look remarkably cheap compared to the market valuation of every other asset on the planet.
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