What Is BitBond? Integrating Bitcoin Into US Treasuries

Sigel’s proposed model consists of 90% traditional government bonds and 10% exposure to Bitcoin. These bonds would have a 10-year maturity period. Investors would receive up to 4.5% annual return, and if Bitcoin gains further value, any profit beyond that threshold would be shared equally between the investor and the government.

This structure allows investors to benefit from traditional bond yields, along with potential upside from Bitcoin’s price appreciation.

Even If Bitcoin Goes to Zero, the Government Can Still Benefit

Sigel highlights a key point: even if Bitcoin’s value drops to zero, the government could still save money. For instance, if BitBonds are issued with a 1%–2% coupon rate, the U.S. Treasury would still be saving compared to the current 4% bond interest rate.

While the structure may seem riskier for investors, it creates scenarios where the government’s borrowing costs are reduced. If Bitcoin’s compound annual growth rate remains high, the model could become profitable for both sides.

Why Would Investors Choose This Bond?

According to Sigel, investors are looking for ways to hedge against the devaluation of the U.S. dollar even in today’s high interest rate environment. Bitcoin, in this context, stands out as a potential inflation hedge. The BitBond structure presents a compelling alternative by offering fixed returns plus additional gains from crypto exposure.

This Isn’t the First Proposal of Its Kind

Sigel’s idea is not the first attempt in this area. Previously, some independent financial institutions have also proposed government bonds backed by crypto assets. Such bonds were estimated to potentially save up to $70 billion annually and create an economic advantage of $700 billion over a 10-year period.

A Pro-Crypto Policy Climate Could Accelerate These Models

With the current administration showing a more crypto-friendly stance, the integration of blockchain-based solutions into traditional financial instruments is becoming more likely. Hybrid models like BitBond could gain more traction in the near future as a tool to reduce borrowing costs and attract global investor interest.

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The analyst also cautioned that if Senator Lummis’ proposal for the U.S. government to acquire 5% of Bitcoin’s supply is approved, price volatility could increase in the short term.

Ben Simpson, founder and CEO of Collective Shift, said:

“I expect it to be quite volatile, especially if the strategic Bitcoin reserve gets approved; I think Bitcoin will pump and then rotate back.”

Bitcoin Dominance Will “start to fall.”

After Trump won the presidential election on November 5, Wyoming Senator Cynthia Lummis, a Trump supporter, Republican, and crypto advocate, announced that she would prepare a bill for the U.S. government to purchase 1 million BTC and hold it for at least 20 years.

Regarding the current market situation, Simpson believes that Bitcoin dominance, which is a measure of how much of the total crypto market value belongs to BTC, will “start to fall.” He thinks the “rotation into altcoins has actually begun” as BTC “started consolidating around $100,000” and altcoins “began to rise.”

At the time of publication, according to TradingView data, Bitcoin dominance is 56.63%, showing a 7.20% decrease over the past 30 days.

Bitcoin Dominance Has Dropped 7.39% Over The Past 30 Days

Crypto trader Momin told his 140,000 X followers on December 13:

“I expect this downtrend in dominance to continue, and we could see altcoins run pretty hard in the coming week.”

However, Simpson believes the transition into altcoin season won’t be so straightforward.

“I think it will be quite volatile; I don’t think it will be a direct transition into altcoin season,” he added.

Bitcoin Will Continue To Be “part of the portfolio” For Institutions

Meanwhile, Bitfinex analysts stated that, based on returns, many altcoins have not yet surpassed new all-time highs against Bitcoin, “proving that Bitcoin has always been a fruitful and competitive investment, even when compared to Altcoins.”

They added, “In our view, even after any pullbacks, Bitcoin will continue to be part of major institutions’ portfolios, and interest in Bitcoin will keep growing.”

Bitfinex analysts also noted that, with Bitcoin now reaching six-figure prices, as long as strong demand continues, any upcoming dips will be short-term and could present buying opportunities for investors:

“At the 100K level, there has been enough spot buying to sustain this level, and leverage levels are reasonable, so even if a dip occurs, which wouldn’t be surprising during the holiday season, the price trend remains healthy, and any dip could be viewed as a buying opportunity.”

They added, “Believers in Bitcoin are becoming more adamant about the asset being a perfect substitute for gold and a true store of value.”

On November 23, global investment manager VanEck reissued its $180,000 price target for Bitcoin at the current cycle’s peak.

VanEck digital asset analysts Nathan Frankovitz and Matthew Sigel stated that the next phase of the crypto bull market is “just beginning.”

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