Sharply higher rates across the U.S. yield curve helped to send markets lower on Wednesday, with the Nasdaq losing 1.15% and S&P 500 0.7%.
Bitcoin was trading at $84,400 shortly after U.S. stocks closed, down 2.2% over the past 24 hours.
Among crypto-related stocks, Strategy (MSTR) slid 3.1%, Coinbase (COIN) fell 1.5%, and Circle (CRCL) slipped 3%.
One sector moving higher on Wednesday was energy, as oil reversed a multi-day slide to gain 2.5%. The State Street Energy Select SPDR (XLE) rose 1%.
“The challenge the U.S. Treasury currently faces is a collapse of investors willing to accept current yields in the face of both structural debasement of the underlying dollar and the expected supply that the Treasury itself will continue to dump on the market,” wrote Strive (ASST) board member James Lavish as the 10-year yield jumped 18 basis points Wednesday to its highest level in more than 19 years.
“The problem is, the higher yields go, the more bonds the Treasury will need to sell,” he continued. “If they step in to buy the bonds themselves, this creates further debasement, only exacerbating the self-reinforcing loop.”
“The Fed raises the price of money to suppress inflation while the Treasury must borrow more money partly because the price of money went up,” said Grain of Salt, calling current conditions a “trap nobody can make disappear.”
“We built a debt structure where the medicine used to fight inflation [higher rates] increasingly aggravates the fiscal disease.”
“At some point, stock market investors will have to take notice of this development, not just the current level, but the powerful trend that will likely send the yield significantly higher from here,” said Peter Schiff. “This is bad news for stocks and the economy.”
“This is unsustainable,” wrote Lukas Ekwueme.
“Contrary to the mainstream narrative, higher rates are inflationary when you're sitting on $40 trillion in debt and running $2 trillion deficits,” he continued.
“Higher rates = higher interest expenses = larger deficits = more money printing needed. The path toward lower rates via yield curve control is getting clearer by the day. We don't own enough gold for what's coming.”
Source
This article is syndicated for educational reading. For the latest updates, visit the original publisher.
Read on coindesk.com
