Strive CEO: US Treasury Market Nearing a Critical Inflection Point, Bitcoin's "Grand Slam Moment" Is Taking Shape

Original Author: Matt Cole, CEO of Strive

Original Compiled by: Jiahuan, ChainCatcher

This is another lengthy macro article, but I don't write these often. One of the most significant macro shifts in decades is taking shape right before our eyes.

When I discussed the long-term trajectory of the U.S. dollar last week, one of the key focal points was where the long end of U.S. Treasuries is headed.

Stanley Druckenmiller published an excellent piece in the Wall Street Journal last night titled "Let the Bond Market Speak." The current U.S. fiscal trajectory is unsustainable: running a fiscal deficit near 6% of GDP while the economy is near full employment and inflation remains above target is highly irresponsible; the continuous expansion of entitlement spending like Social Security and Medicare essentially shifts the fiscal burden onto the next generation; and attempting to suppress long-term Treasury yields does nothing to address the root cause of the fiscal problem.

The Real Constraint on Fiscal Issues Isn't Economic, It's Political

Druckenmiller's argument is that suppressing yields merely delays the fiscal correction that high interest rates would otherwise force upon Washington. Economically, he's right, but I don't think our assessments of the eventual outcome are all that different.

As early as the mid-2010s, I had already concluded that relying on sustained bond market pressure to force the U.S. into establishing sufficient fiscal discipline was unrealistic. This was one of the key reasons I initially turned to Bitcoin. Druckenmiller himself also invests in Bitcoin and other hard assets, which leads me to believe his diagnosis of the underlying problem likely aligns with mine.

His article reads less like a prediction of what Washington will ultimately do, and more like a warning about what Washington should do before it's too late.

To me, this looks like a nearly last-ditch plea from a top-tier macro investor: let the market constrain a political system that can no longer constrain itself. I hope policymakers will listen, but unfortunately, I know they won't.

Druckenmiller himself explicitly points out the political constraint: no political party will campaign on entitlement reform. That's precisely the problem.

Fiscal plans that make sense on paper often don't help parties win elections. While the heads of the Treasury and other government departments are appointed officials, the boundaries of their actions are ultimately determined by elected politicians and the voters behind them.

This distinction is crucial. Appointed officials can be highly intelligent, deeply responsible, and genuinely want to strengthen the country, but they remain bound by the realities of political incentives.

Scott Bessent clearly understands the fiscal problems facing the U.S. I believe his fundamental diagnosis of the issue aligns with Druckenmiller's. But Bessent must operate within a real political system when managing the Treasury—a system whose policy direction is set by elected officials and cannot simply follow whatever is optimal on a macroeconomic balance sheet.

The experience of the Department of Government Efficiency (DOGE) has already demonstrated this. Elon Musk may be the most effective corporate operator of our generation, and he entered government with the explicit mandate to dramatically cut spending.

But institutional and political forces are more powerful. DOGE failed to change America's fiscal trajectory; the deficit continues to widen.

This isn't a denial of the capabilities or intentions of those involved, but rather an indication that the constraints themselves are structural. Investment must be grounded in reality, not in the world we wish to see.

As fiscal conditions continue to deteriorate while policymakers refuse to let long-term rates fully reflect these changes, the adjustment pressure won't disappear—it will simply be transferred elsewhere. The dollar will become the pressure release valve for this system.

5.25%–5.85%: The Policy Tipping Point for the Treasury Market

Today's Treasury market can hardly be called a completely free, unmanipulated market.

The Federal Reserve currently holds approximately $1.6 trillion in Treasuries with remaining maturities exceeding 10 years, accounting for about 28% of all Treasuries in that maturity bucket.

After long-term yields approached two-decade highs, the U.S. Treasury doubled its planned buyback size for 10- to 30-year Treasuries and explicitly stated it could significantly expand operations further in the future.

The significance of these actions goes beyond the scale of funds involved; it reveals the government's logic for responding to rising long-end yields.

The Treasury has clearly demonstrated sensitivity to rising long-term yields, yet the funds committed are insufficient to truly reverse the yield trajectory. The market also hasn't treated the initially announced buyback program as a turning point in the trend.

Druckenmiller is right: once the market concludes that the Treasury is propping up bond prices and suppressing long-term yields, every further rise in yields becomes a new test of the policy floor.

In my view, the Treasury will ultimately regret intervening so early and with such limited scale. It exposed its sensitivity to long-end yields while committing insufficient resources to change market direction—an open invitation for the market to probe for the real policy red line.

My expectation is that current interventions won't work, long-term yields will continue to rise, and the bond market will eventually force Washington to prove whether it's truly prepared to act.

When the market truly hits the policy floor, I expect Washington will ultimately get serious. Policy signals like expanding Treasury buybacks or tapping the Treasury General Account (TGA) are certainly important, but if long-end Treasuries continue to be sold off, signaling alone won't be enough to change the market.

At some point, the market will force the Treasury to stop telling investors "what it could do" and instead commit capital at a scale sufficient to actually shift market dynamics.

Over the past few years, I've been tracking a critical resistance zone on the 10-year Treasury yield chart: 5.25%–5.85%.

In my view, this is the most important test zone in the current secular uptrend in long-term rates. This range wasn't drawn arbitrarily based on last week's price action.

It stems from my fundamental assessment of the U.S. debt trajectory: as fiscal problems worsen, long-term yields will naturally rise; and at a certain level, the political and financial consequences of tolerating further yield increases will become unbearable, forcing the Treasury or Fed to act.

Charts matter, but this has never been about drawing lines on a chart and assuming yields will automatically reverse at a certain level.

This zone matters because I've always believed that deteriorating fiscal fundamentals would eventually push yields here; simultaneously, the cost of allowing yields to break significantly beyond this range becomes increasingly difficult to bear.

If the 10-year Treasury yield enters the 5.25%–5.85% range, the headlines can almost be written in advance: 10-year yields at levels not seen since around 2007, but this time, the U.S. carries far more debt and faces a much more difficult fiscal situation than back then.

Prices move first; narratives follow. When Treasuries fall far enough, the market will quickly start discussing "Treasury market dysfunction," "unstable government financing," or even "the world's most important bond market is sliding into crisis."

This narrative itself adds political pressure for government action. Mortgage rates, government interest expenses, equity valuations, and overall financial conditions will all come under greater strain, and every further rise in yields adds to the government's interest burden and fiscal pressure.

In fact, the Treasury is already reacting before the market has even entered the zone I've been watching.

If yields ultimately enter this range, I expect the Treasury or the Fed will be the first to blink and intervene in the market at scale.

Potential tools include: dramatically expanding Treasury buybacks, relying more heavily on short-term bill issuance, drawing down the Treasury General Account, restarting Federal Reserve balance sheet expansion, managing yields through explicit or implicit means, or using a combination of the above.

I wouldn't be surprised if the eventual intervention in the Treasury market ends up being on a completely different scale than what's currently announced.

But before meaningful policy intervention arrives, financial markets may first experience significant stress. Rising long-term yields will further compress equity valuations, while AI is leading more investors to question whether corporate moats can hold up long-term. When both happen simultaneously, traditional equities and other risk assets will face greater pressure.

The Dollar as the Pressure Release Valve: Bitcoin's Opportunity Is Taking Shape

Bitcoin deserves more attention because the policy endgame is becoming increasingly clear.

During the final leg higher in yields, will Bitcoin follow the market meaningfully lower, or will it withstand the pressure and continue rising? In my view, the probabilities of these two scenarios are roughly equal.

If Bitcoin experiences a significant decline at that point, I would view it as a once-in-a-lifetime accumulation opportunity, because policymakers will ultimately be forced to intervene in the market at a much larger scale.

But I won't restructure my entire portfolio just to wait for that opportunity. The current macro environment is already favorable enough. In my view, if you haven't established a position yet, you should start building one now.

A pullback would present a rare opportunity; but the market could also front-run the eventual policy pivot and ignore short-term pressures.

From a traditional fixed income perspective, 5.25%–5.85% has always been a zone suitable for significantly adding duration exposure.

If the Treasury or Fed acts as I expect, long-term Treasuries could perform exceptionally well, as policymakers push yields back down.

But Strive doesn't execute a fixed income strategy—it executes a Bitcoin strategy. In this macro environment, what we need to do is maximize Bitcoin exposure while remaining prudent.

Treasuries would certainly benefit from policy intervention, but I'd rather be long risk and long scarcity, particularly the strongest-performing asset within that category. For me, that asset is Bitcoin.

Rather than holding an asset whose yield is being explicitly suppressed by policymakers, Strive prefers to amplify Bitcoin exposure in this macro environment.

This brings us back to my dollar thesis from last week.

Druckenmiller is right: governments that push against fundamentals to prop up a price will ultimately fail. But that doesn't mean the government can't suppress the specific price it's targeting for a considerable period of time.

If Washington refuses to genuinely cut spending, then among the politically viable options, suppressing long-term yields and allowing the dollar to weaken may be the lesser evil.

The correct solution is, of course, implementing more conservative, sustainable fiscal policies. But given that this path is politically difficult to achieve—and with America's current debt levels—allowing long-term yields to spiral out of control could quickly trigger a more immediate Treasury market crisis.

Both financial repression through policy-suppressed long-term rates and a weaker dollar are undesirable outcomes, but they remain more acceptable than allowing the U.S. government's financing system to rapidly descend into disorder under market shock.

This is why the dollar will become the pressure release valve. The Treasury and Fed can suppress long-term yields, but they cannot make fiscal imbalances disappear. The adjustment costs will inevitably be transferred elsewhere, and currency weakness is the politically easier option to bear.

Therefore, I don't view the dollar index falling to the high-60s or low-70s as an entirely unimaginable extreme outcome. It would put the dollar at modern-era lows, but from a longer historical perspective, it wouldn't be unprecedented.

Bitcoin has repeatedly benefited from weak-dollar environments in the past, but it has never experienced a period of the dollar index trending down to this level. Bitcoin was born after the 2008 dollar low, and its entire history has been shaped by an environment where the dollar was either recovering from those lows or clearly trading above them.

Therefore, the dollar trending to new lows would be a genuinely unprecedented macro environment for Bitcoin. The changes in the Treasury market also add another layer of fundamental support to the framework I've previously laid out.

Dilution of the dollar's purchasing power expands the pool of capital seeking scarce assets; as Bitcoin's recognition as a monetary asset continues to grow, it can attract an increasingly larger share of that capital.

Meanwhile, AI is making technology and product supply more abundant, making it harder for many traditional businesses to sustain their moats long-term. In contrast, Bitcoin's scarcity cannot be replicated or diluted by competitors, further enhancing its appeal.

The most explosive scenario is when these forces begin to operate simultaneously: global capital seeking scarce assets continues to grow; as Bitcoin continues to outperform other scarce monetary assets, its share of that capital increases; and Strive further amplifies the upside elasticity of Bitcoin through its own capital structure.

These drivers aren't independent of one another—they compound.

This is what I see as the "grand slam scenario": a weakening dollar, policymakers increasingly aggressive in suppressing long-end Treasury yields, AI continually eroding the scarcity of traditional corporate moats, Bitcoin re-emerging as the strongest-performing scarce monetary asset, and Strive positioned to maximize Bitcoin's performance in this environment.

If the bond market triggers a temporary Bitcoin pullback along the way, I want to be buying aggressively; if Bitcoin prices in the policy endgame in advance and never sees a meaningful correction, I want to have already built my position.

Druckenmiller ends his article by urging Washington to "let the bond market speak." I share his warning and, like him, I'm frustrated by Washington's reluctance to address the root problem and its willingness to pass the costs on to the next generation.

But the bond market must deliver a sufficiently forceful warning to compel policymakers to intervene at a meaningful scale. When that moment arrives, they're more likely to suppress the signal than to undertake a fiscal restructuring that would solve the problem at its root.

The path I've been tracking for years is becoming increasingly clear: the 10-year Treasury yield entering the 5.25%–5.85% resistance zone, the Treasury market narrative shifting toward crisis, Washington being forced to commit real capital at scale, the pressure that should be reflected in long-term yields being transferred to the dollar, and the dollar's secular downtrend accelerating as a result.

In one sentence: the market's expectations for Bitcoin's long-term upside may still be far too conservative.