VanEck’s Gurbacs Predicts Rise In Bitcoin Interest As Negative Yield Bonds Reaches $15 Trillion
Deutsche Bank has reported that 27% of global bonds traded have been trading in negative yield. Taking this into consideration, VanEck digital asset director, Gabor Gurbacs says that it is time for ‘Plan ₿’.
According to Deutsche Bank, 27% of bonds in the world trade at a negative interest rate with a total market value of ~$15 trillion or 75x #bitcoin’s market cap. It’s time for Plan ₿! pic.twitter.com/KrZbR4ocxl
— Gabor Gurbacs (@gaborgurbacs) August 14, 2019
A negative bond yield is an unusual situation in which issuers of debt are paid to borrow. At the same time, depositors, or buyers of bonds, pay a cash flow instead of receiving interest income.
Investors who fear or expect deflation tend to find nominal bonds with even negative yields attractive as long as expected deflation makes real yields positive. In a deflationary environment, investors tend to shift away from real into nominal assets. This suggests a rise in interest in Bitcoin.
In the US the universe of bond and hybrid mutual funds that are passive is $375bn or 7.8% of all bond and hybrid mutual funds. Banks buy bonds with negative yields to escape negative depo rates such as those by the ECB, SNB and the Danish central bank.
The International Monetary Fund has reported subdued growth around the globe as the two largest economies, the United States and China, engage in a trade war. Germany said this week that industrial production fell 1.5 percent in June, far more than expected, raising fears of a recession in Europe’s largest economy.
There are other signs too and they all point to a rise in interest in alternative assets and this is where Bitcoin comes in.