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With its hard-coded supply limits, disinflationary characteristics enforced by the periodic halving events, and growing financialization via futures and spot ETFs, Bitcoin is on the cusp of underpinning a new global hurdle rate, which is generally defined as the minimum rate of return required by investors.
Concurrently, the US Treasury will need to issue a growing quantum of t-bills and bonds in the upcoming years to finance the burgeoning deficit of the world's largest economy. Now, one Bitcoin maximalist has posited that the US can leverage Bitcoin's unique characteristics to partially fund those deficits.
Prinicpal-Protected Bitcoin Bonds
If a gov, state/city, or corp. could've issued a $1 Billion #Bitcoin Bond 5 years ago...
Here's the would-be results:
$1 Billion Raised
$800M put in 5yr Issuer Note @ 4.564% APY
$200M put in spot $BTCUpon maturity...
-> $800M Note matures at $1B
Issuer note provides… https://t.co/1d6pRTwEVA pic.twitter.com/hCYGEh01BZ
— CJK (@CJKonstantinos) July 16, 2024
Konstantinos is an avid Bitcoin maximalist. Recently, he penned an intriguing post on X that lays down the case for principal-protected Bitcoin bonds.
Let's say, the US Treasury raises $1 billion by issuing a Bitcoin bond, where 80 percent of the principal is treated like an $800 million 5-year note carrying an APY of ~4.5 percent, and the residual 20 percent or $200 million is invested in Bitcoin.
The $800 million 5-year note will mature at a value of $1 billion, offering principal protection to investors. On the other hand, the $200 million Bitcoin tranche offers a variable yield.
#Bitcoin is the #1 performing asset since 2013. pic.twitter.com/0u8sKlAi37
— Watcher.Guru (@WatcherGuru) July 16, 2024
Let's say, the US Treasury did issue such a bond 5 years ago when Bitcoin was trading at around $10,000. Relative to the current price of around $60,000, this corresponds to a price appreciation of around 500 percent. Consequently, BTC worth $200 million 5 years ago would be worth around $1 billion at today's price.
Cumulatively, the lenders will get paid $2 billion for the $1 billion that they lent 5 years ago, as per this theoretical scenario.
What's more, with Bitcoin predicted to reach a price that is in excess of $1 million over the next decade, the US government can exploit this explosive growth to finance its soaring deficits at very attractive terms.
Bitcoin's Near-Term Price Trajectory
The #Bitcoin market recently absorbed over 48k BTC in sell-side sourced from the German Government.
With Mt Gox distributions also on the horizon, we examine these major sell-side forces, as well as the role ETFs have on price action.
Discover more in the latest Week On-Chain… pic.twitter.com/RhK8Pj7tPt
— glassnode (@glassnode) July 16, 2024
As we noted in another post, the German government has now completed its sale of around 50,000 BTC seized during a raid on the pirated content website Movie2K. Moreover, the market remains on edge as Mt Gox creditors continue to get paid ahead of the October 2024 deadline.
For the benefit of those who might not be aware, the Mt Gox exchange had declared bankruptcy in 2014 after a devastating hack that resulted in a loss of around 850,000 BTC. In February 2023, as part of the much-delayed settlement, some of the defunct exchange's largest creditors agreed to Bitcoin- and Bitcoin Cash-denominated transfers before the 31st of October, 2024.
the Bitcoin ETFs are in "two steps forward" mode after one step back in June with another +$300m yesterday and $1b for week. YTD net total (the most imp number in all this) has crossed +$16b for first time. Our est for first 12mo was $12-15b so already cleared that w 6mo to go. pic.twitter.com/0V7wE9D5OU
— Eric Balchunas (@EricBalchunas) July 16, 2024
On the bright side, net inflows into the spot Bitcoin ETFs remain robust, having already crossed the $16 billion mark in just 6 months.
Imagine being bearish on #Bitcoin while the full-fledged global central bank easing cycle hasn't barely even started... https://t.co/FmlQDgCVlm
— André Dragosch | Bitcoin & Macro ⚡ (@Andre_Dragosch) July 16, 2024
Finally, analysts are already positioning for a broad-based global liquidity bonanza, which should act as a potent tailwind for the world's largest cryptocurrency.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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