latest article believes that even if the initial reaction is a sell-off of Bitcoin due to war and rising energy prices, Bitcoin will perform better than bonds during war times. Even if there is an initial period of weakness, he will buy the dip. TLT the long-term US Treasury bond ETF has fallen 12% and Bitcoin pumping 52% since the onset of the Ukraine / Russia war.
US Treasury bonds are debt securities issued by the United States Department of the Treasury to finance the government's spending needs. They are considered one of the safest investments in the world due to the backing of the US government.
Here are a few key points about US Treasury bonds and their importance:
Government Debt Financing: The issuance of Treasury bonds allows the US government to borrow money from investors to fund various expenses such as infrastructure projects, social programs, and debt refinancing. By purchasing these bonds, investors effectively lend money to the government.
Safety and Creditworthiness: US Treasury bonds are generally regarded as low-risk investments due to the creditworthiness of the US government. The US government has a long history of meeting its financial obligations, and its ability to collect taxes and print currency provides a high level of confidence in repayment.
Income Generation and Yields: Treasury bonds pay periodic interest to bondholders, providing a source of income. The interest rates or yields on these bonds are influenced by various factors, including market conditions, inflation expectations, and the overall state of the economy.
Liquidity and Marketability: US Treasury bonds are highly liquid, meaning they can be easily bought or sold in the financial markets. They are traded on various exchanges and are actively sought after by individual and institutional investors who desire a secure investment option.
Benchmark Rates and Risk-Free Rates: Treasury bonds serve as a reference point for many other financial instruments and markets. They are used to determine risk-free rates for valuation purposes, such as pricing corporate debt, mortgage rates, and derivatives contracts. The yields on Treasury bonds also influence interest rates in the broader economy.
Portfolio Diversification and Risk Management: Treasury bonds are often used as a component of diversified investment portfolios. Their low-risk nature and typically negative correlation with other assets, such as stocks, can help mitigate overall portfolio risk and provide stability during market downturns.
Overall, US Treasury bonds play a crucial role in providing a safe and reliable investment option for investors, setting benchmark rates, and allowing the government to finance its operations and obligations.