brock on Nostr: One of the most fascinating dynamics to watch over the next decade will be the ...

One of the most fascinating dynamics to watch over the next decade will be the interplay between Bitcoin and government-issued bonds.

From a purely logical standpoint, these two instruments are fundamentally incompatible under current market dynamics—especially for maturities of five years or longer.

For treasury bonds with 5+ year durations to remain competitive with Bitcoin, they’d need to offer yields north of 20%. That’s not a forecast—it’s math.

The idea of Bitcoin-backed bonds doesn’t resolve this either. If an investor believes in Bitcoin’s trajectory over a 5+ year horizon, the rational choice is to hold the asset directly—not lend it out or buy structured products that are mathematically guaranteed to underperform.

In other words, the “risk mitigation” case for Bitcoin-backed bonds collapses when the alternative is simply owning Bitcoin.

So what happens next? Either market participants will need to be emotionally persuaded—manipulated, even—or governments and institutions will need to reframe the entire narrative around sovereign debt and monetary alternatives.

How (or if) that messaging is managed over the coming years will be one of the great financial psychodramas of our time.