The US deficit continues to rise despite the economy’s growth, and US Treasury returns have decreased for the past three consecutive years. This might be the driving force behind the next step in the cryptocurrency market.

The Federal Reserve won’t tell market participants that rates can’t increase any further. If they do, it would cause inflation expectations to become unanchored. To understand what the bond market is saying, take note that this is the first time in the history of the United States that US Treasury returns have dropped for three years in a row.

There is a potential vicious circle that could weaken the US dollar. Bond prices are inversely related to their yields. Consequently, lower bond prices result in higher yields, and the only way to increase bond prices is to decrease yields (i.e., interest rates).

The deficit is a major issue because it has increased despite the economy’s growth. This causes the US to issue more bonds to cover the deficit, but since interest rates are no longer low, interest rate expenses cancel out the revenue generated by selling the bonds.

The solution might be for the dollar to weaken. If it does, it could have a great impact on the cryptocurrency market. Consequently, if Bitcoin is about to rise, it is essential to keep track of the US deficit and the US dollar.