A surge in U.S. and Japanese government bond yields is a signal of structural change that may be difficult to sustain over the long term, and it could lead to a prolonged rise in Bitcoin prices, an analysis showed. On May 24, blockchain outlet Cointelegraph reported that BitMEX senior research analyst Shang Wu (샹 우) said bonds once seen as low-risk assets are being shaken, pushing bond investors into panic.

Wu pointed to the U.S. 30-year Treasury yield rising above 5.14 percent on May 20, while the Japanese 10-year government bond yield climbed to 2.8 percent. He said those yield levels are not sustainable over the long term. He argued that central banks are being forced to choose between a sovereign debt breakdown and currency debasement.

He said that with U.S. national debt above $39 trillion, keeping rates high could soon cause the government's annual interest costs to eat up total federal tax revenue. He also said it would be difficult to control inflation through rate hikes alone in a situation where debt keeps rising due to deficit spending.

Rising government bond yields are usually used as a tool to tighten credit and lower prices. But the higher rates go, the bigger the government's debt interest burden becomes. Wu said this structure could be the backdrop for money moving from assets where supply can be increased through currency debasement to assets whose supply cannot be expanded.

The analysis also cited the increase in U.S. national debt, heightened geopolitical tensions and higher energy prices due to the war in Iran as factors adding to inflation pressure. Wu and macroeconomist Lyn Alden said central banks could provide liquidity through methods such as yield curve control or non-public buybacks of U.S. Treasuries instead of overt quantitative easing.