As US long-term government bond yields surge and the market becomes volatile, JPMorgan Chase CEO Jamie Dimon warns that the US bond market may once again fall into chaos, and the Federal Reserve may have to replay the intervention script from the early days of the pandemic in 2020.
Currently, bond liquidity is rapidly deteriorating, and market volatility is intensifying, which not only tests the limits of the regulatory system but may also reignite market demand for Bit as a hedge.
Dimon Warning: US Bond Market Will Fall into Chaos, Fed May Be Forced to Intervene
Jamie Dimon directly stated in the earnings call on April 12 that the nearly $30 trillion US Treasury market is on the edge of potential uncontrollability. He pointed out:
"The bond market will eventually experience chaos (kerfuffle), and the Fed won't act too early unless it starts to panic."
Dimon believes that current regulatory restrictions make it difficult for banks to intervene and support the market during liquidity drought, which may replay the scenario from the early days of COVID-19 in 2020, when the US bond market also experienced a severe liquidity crisis. In response, the Federal Reserve quickly launched a multi-trillion-dollar bond-buying program to stabilize the market.
Coincidentally, Bit prices also began to surge from March that year. Although factors like halving effects were also involved, the market generally believes that the Fed's liquidity injection played a key catalytic role. With a similar scenario recurring, does this mean Bit will benefit again?
Dimon Calls: Banks Should Be Allowed to Buy Bonds Freely
Additionally, Dimon calls for considering excluding US bonds from leverage ratio calculations, allowing financial institutions like banks to purchase more government bonds without affecting capital adequacy ratios. Otherwise, they can only rely on Fed intervention, which would be a "very poor policy choice".
The US Treasury market plays a core role in global finance, setting the tone for everything from mortgage rates to corporate bond yields. Dimon warns that if this system falls into paralysis again, the consequences could trigger a chain reaction throughout the economy.
Funds May Shift Towards Bit
Amid bond market chaos, Bit rose from $74,508 last week against the trend. Some investors expect that if the bond market collapses, the Fed will inevitably restart bond purchases or liquidity support mechanisms, essentially a form of easing that could drive Bit and other assets upward.
One notable supporter of this stance is BitMEX co-founder Arthur Hayes, who previously said that if the MOVE index (bond market VIX) breaks 140, the Fed will be forced to "restart the money printer", benefiting Bit's rise.
Yesterday, he also shared a chart of the US 10-year bond yield surging to 4.56% and noted:
"The situation is developing rapidly. If this trend continues, we will see more policy-level responses this weekend. Bit is about to enter a mode of only rising."
Before filing, the US 10-year bond yield was temporarily reported at 4.458%, down -0.87% in the past 24 hours.
