Implications Of Bill Ackman’s 30-Year T-Bills Short

What does this mean for Bitcoin and the broader crypto market? In a surprising move that has sent ripples through the financial world, billionaire hedge fund manager Bill Ackman recently announced that he is shorting 30-year Treasury bills. Ackman predicts that yields could soon skyrocket to 5.5%, a move he is positioning as a hedge against the impact of long-term rates on stocks in a world he believes will be characterized by persistent 3% inflation.

“I have been surprised how low US long-term rates have remained in light of structural changes that are likely to lead to higher levels of long-term inflation,” Ackman wrote on Twitter. He cited factors such as de-globalization, higher defense costs, the energy transition, growing entitlements, and the greater bargaining power of workers as potential drivers of this inflation.

Ackman also pointed to the overbought nature of long-term Treasurys and the increasing supply of these securities due to the U.S.’s $32 trillion debt and large deficits. “When you couple new issuance with QT, it is hard to imagine how the market absorbs such a large increase in supply without materially higher rates,” he added. Remarkably, the 30 year yield climbed to 4.28% yesterday.

However, not everyone agrees with Ackman’s perspective. Ram Ahluwalia, CEO of Lumida Wealth, suggested that Ackman’s views might already be priced into the market. “When someone has an idea, especially a hedge fund manager, it’s good mental habit to assume the idea is Consensus,” Ahluwalia wrote on Twitter. He even suggested taking the opposite view, advocating for buying 10-year bonds in the 4.1 to 4.25% range and mortgage bonds at 6.5 to 7%.

Meanwhile, Lisa Abramowicz, a Bloomberg analyst, noted that the U.S. Treasury selloff has been driven by long-dated notes, not those most sensitive to Fed policy. “This suggests two things: traders expect inflation to stay higher for longer and they question whether the Fed is truly going to raise rates high enough to achieve 2% inflation,” she said.

Implications For Bitcoin And The Crypto Market?

Since the opinions are divergent and, moreover, Bitcoin and bond yields are linked in several ways, there are several potential scenarios.

Scenario 1: Yields Rise Significantly

If Bill Ackman’s prediction comes true and the yield on 30-year Treasury bills rises significantly to around 5.5%, this could have several…