Feb 10, 2026
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BULLISH 📈 : Bitcoin could benefit from potential Fed–Treasury yield-curve control
Kevin Warsh's proposal for a new Fed-Treasury accord is sparking debate about potential economic impacts, particularly on hard assets like bitcoin. This follows reports suggesting a possible shift towards softer rates and higher liquidity.
- The proposed accord could redefine the relationship between the Fed and Treasury, possibly impacting the Fed's independence and increasing market volatility.
- Political pressure to address debt-service costs is significant, with interest costs at approximately $1 trillion annually.
- Analysts suggest that Warsh may support yield-curve control (YCC), potentially inflating debt away by maintaining artificially low short-term interest rates.
- This structure involves the Fed buying unlimited amounts above certain levels to lower interest rates, echoing strategies from the World War II era.
- Speculation exists that Warsh might prefer aligning monetary operations more closely with Treasury financing, possibly affecting real yields and market liquidity.
- A lower real yield framework might drive capital from risk-free assets to inflation hedges like equities, gold, and crypto.
- Potential volatility in rates markets could result from perceived threats to the Fed's independence and heavy Treasury issuance.
The impact on bitcoin and other cryptocurrencies hinges on changes in real yields and liquidity conditions, which affect investor behavior regarding fiat debasement risk.
