The US government is currently facing an awkward situation: the speed at which it pays interest is almost catching up with the speed at which it makes money.

Currently, interest expenses account for about 14% of total federal spending, and the problem is that Treasury yields are only at 3.7%. Just think, if rates go up a little more, how much tighter will fiscal conditions get? Any fluctuations in interest rates will become extremely sensitive.

Hassett is very likely to be Trump’s preferred candidate for the next Fed chair, and he’s clearly on the side of rate cuts. But frankly, the current consideration for cutting rates isn’t because the economy needs stimulus—it’s purely because the interest costs are becoming unbearable.

I’ll be focusing on two main things going forward:

First is the formal nomination of the next Fed chair and his public statements. Will he prioritize controlling inflation, or will he put promoting growth first?

Second is how long-term Treasuries react to rate cut expectations. Interestingly, if the market increasingly expects rate cuts, long-term rates might actually become less cooperative.

It’s entirely possible that while short-term rates do come down, long-term rates get pushed up by the market, resulting in fiscal pressure not easing, but actually becoming heavier.

What impact will this have on BTC?

First, the market already expects a rate cut in December, so it may not be any new positive news for BTC.

Second, if the US economy really can’t hold up, and rate cuts cause the dollar to weaken and real rates to fall, BTC could indeed get more liquidity support.

But be aware of another possibility: if the market interprets rate cuts as “the economy really can’t take it,” risk appetite will drop. In that case, BTC is more likely to get dumped in the short term.