UK bond yields are screaming. The 30-year gilt hit 5.5% Wednesday, a level not seen since 1998. It’s a global thing, sure—U.S. yields are climbing too—but this feels…familiar. Like a bad dream you thought you’d woken up from.
- UK bond yields are spiking, reminiscent of the market instability seen in 2022. This is creating uncertainty and prompting investors to seek alternative assets.
- The UK’s gilt market structure, being smaller and less liquid than the U.S. Treasury market, makes it particularly vulnerable to shocks. Pension funds holding a significant portion of these gilts amplify the risk.
- Bitcoin is being considered as a potential alternative investment due to its decentralized nature and lack of correlation with traditional markets like stocks and bonds. This makes it an attractive option for diversification during times of economic instability.
Markets don’t like uncertainty. And right now, uncertainty is throwing a party. Donald Trump’s talk of tariffs is stirring things up, threatening to gum up the global trade machine. Equities are feeling the pinch. Nasdaq’s down 10% since last Thursday. Bitcoin? It’s held up a little better, dropping 8%, but still. Nobody’s exactly celebrating.
Charlie Morris, over at ByteTree, thinks this is where things get interesting. Investors, he says, are starting to look around for somewhere else to put their money. Gold, naturally. But also…Bitcoin. “The UK has been living beyond its means for too long,” Morris told us. “The gilt market has had enough.” It’s a blunt assessment, but not entirely wrong.
Echoes of 2022
This isn’t just about tariffs or government spending. It’s about memories. Specifically, the near-collapse of the UK pension system in 2022. Remember Liz Truss? The mini-budget? The chaos? It all started with rising gilt yields. Pension funds, using complicated investment strategies, got caught in a squeeze. They had to sell gilts, driving prices down further, creating a feedback loop that nearly broke everything. The Bank of England had to step in, a rather expensive bailout.
The problem, as a Chicago Fed Letter pointed out, wasn’t just the yield spike. It was *how* the UK gilt market is structured. It’s smaller, less liquid than the U.S. Treasury market. And a huge chunk of it—around 28%—was held by those same vulnerable pension funds. A $1.5 trillion market, suddenly under immense pressure. It was a mess. And it feels like we’re staring down a similar situation now.
Steve Baker, a former UK MP, put it bluntly: “President Trump said he was using brute economic force—and he is.” He thinks the UK needs to rediscover free trade, and fast. Easier said than done, of course. But the message is clear: this isn’t just a financial problem. It’s a political one too.
So, what does this have to do with Bitcoin? Well, when traditional markets look shaky, people start looking for alternatives. Bitcoin, despite its own volatility, offers something different. It’s decentralized, independent of governments and central banks. It’s a bet against the system, in a way. And right now, a lot of people are starting to feel like the system is a bit…unreliable.
It’s not a perfect solution, of course. Bitcoin has its own risks. But as Morris points out, investors are looking for diversification. They want something that isn’t correlated with stocks and bonds. And in a world where everything seems to be going wrong, that’s a powerful incentive. The gilt market is sending a signal. It’s a warning. And Bitcoin, for better or worse, is listening.