The Bitcoin carry trade now pays more than US government debt. On August 7, annualized Chicago Mercantile Exchange (CME) Bitcoin (BTC) futures carry reached 5.69% to 7.89%, well above the 4.19% two-year Treasury yield recorded the same day.
The flip lands at an awkward moment for bonds. Long-term Treasury yields sit at their highest levels since 2007, and forecasters keep raising their estimates.
Bond Forecasters Keep Chasing Yields Higher
A Reuters poll sees calmer bonds ahead. The median forecast puts the 10-year yield at 4.50% in three months and 4.34% in a year. The two-year is seen sliding to 3.80%.
However, the same survey carries a warning. Eighteen of 22 strategists said the 10-year is more likely to overshoot those forecasts than undershoot them.
Their track record explains the caution. In March, the same poll series saw the 10-year near 4.25% a year out. Five months later, it trades above 4.70%.
Meanwhile, the long end is already breaking ranks. The 30-year yield touched 5.27% on Tuesday, its highest since 2007. BeInCrypto covered the 30-year Treasury yield closing at a 2007 high in late July.
Real yields are doing the damage, not inflation bets. In other words, investors want more compensation for US deficits and heavy debt sales.
Bitcoin Carry Trade Outpaces the Two-Year Treasury
The trade itself is simple. A desk buys spot Bitcoin and shorts a CME futures contract against it. The gap between the two prices becomes the return, collected as they converge at expiry. Think of it as crypto's version of a bond coupon.
On August 7, that gap beat the government. Measured against the $64,880 CME New York spot benchmark, the August contract settled at $65,175. That works out to a 7.89% annualized return.
