Ex-Treasury Chief Warns of US Treasury Market Crash and Calls for Debt Plan

By: crypto insight|2026/04/17 11:00:12
0
Share
copy

Key Takeaways:

  • Former Treasury Secretary Henry Paulson warns of a potential US Treasury market crisis and urges for an emergency contingency plan.
  • A crash could result in higher yields on Treasurys, increasing the deficit due to burgeoning government debts currently over $39 trillion.
  • Such a crisis may drive investors towards alternative assets like Bitcoin and gold, affecting crypto markets significantly.
  • The recent largest single debt buyback by US Treasury of $15 billion aims to enhance market liquidity.
  • Potential impacts on crypto include short-term volatility but a possible long-term shift towards non-sovereign assets like Bitcoin.

WEEX Crypto News, 2026-04-17 07:11:26

Potential Crisis in US Treasury Market

Former Treasury Secretary Henry Paulson has sounded an alarm on a possible collapse in the US Treasury market demand, urging immediate preparation for this scenario. Without hesitation, Paulson emphasized the need for a contingency plan, saying, “When we hit it, it will be vicious.” Treasurys, essential to global finance, serve as a “risk-free” benchmark affecting assets like corporate bonds, mortgages, and stocks. Instability here could send shockwaves through the global economy.

The growing national debt, standing at over $39 trillion, may create a “doom loop,” pressuring investors to demand higher yields on Treasurys. Presently, interest payments are 4.3% on 10-year notes, which could further strain the deficit. Many speculate that if the Treasury struggles to meet interest payments, the Federal Reserve might step in as the primary purchaser.

Double-Edged Impact on Crypto Markets

The potential US Treasury market meltdown holds significant implications for crypto markets. Such a crisis could lead to a mass move towards Bitcoin (BTC) or gold as safer values. This shift might occur if the Fed begins monetizing debt, raising inflation concerns and eroding trust in the dollar. Interestingly, Tether, the world’s largest stablecoin issuer, remains heavily backed by Treasurys—63% in US Treasury bills and 10% in reverse repurchase agreements.

Andri Fauzan Adziima, research lead at Bitrue, classifies this as a “macro tail risk.” Initially, crypto may face short-term hurdles—spiking yields, tightening global liquidity, and aggressive sales of BTC and altcoins amplifying stablecoin risks. However, over the long haul, these events could bolster Bitcoin’s stance as “digital gold,” strengthening its appeal amid diminishing faith in US debt and the dollar.

US Treasury’s Largest Debt Buyback

Recently, the US Treasury completed its largest single debt buyback, purchasing $15 billion in older securities maturing from 2026 to 2028. This move aims at boosting liquidity, retiring less-traded bonds, and supplying existing holders with cash for potential reallocation in the financial systems.

This buyback strategy is essential, allowing the Treasury to maintain market stability and investor confidence. By removing less desirable bonds, the Treasury effectively mitigates liquidity risks and smoothens operations within the financial ecosystem.

-- Price

--

FAQ

What potential effects could a US Treasury market crash have on cryptocurrencies?

A crash could propel investors towards assets like Bitcoin or gold, undermining the dollar’s trust. This might cause initial instability in crypto markets, with risks to stablecoins like Tether. Long-term effects could see Bitcoin gain as a preferred non-sovereign value store.

Why is a US Treasury market crisis significant?

The Treasury market acts as a benchmark for global finance. Instability here affects various asset classes like corporate bonds and mortgages, risking a global economic ripple effect, especially with national debt over $39 trillion.

How is the Federal Reserve involved if the Treasury market crashes?

If the Treasury struggles to raise funds to cover interest, the Federal Reserve may step in, potentially becoming the main buyer of Treasurys. This could impact market dynamics and monetary policy significantly.

What are the immediate impacts on the crypto industry during a Treasury crisis?

Short-term impacts may include market volatility, heightened yields, tightened global liquidity, and severe price drops in Bitcoin and altcoins. Stablecoins might face increased risks due to reliance on Treasurys for backing.

What is the role of the largest debt buyback by the US Treasury?

The recent debt buyback, worth $15 billion, aims to enhance market liquidity by retiring less-traded bonds. It provides liquidity and flexibility, allowing the redistribution of cash within financial systems while maintaining market confidence.

You may also like

Former ByteDance employee's account: How I started with two Pinduoduo hard drives and made six times the profit with Seagate to achieve financial freedom?

A programmer from a big tech company bought hard drives on Pinduoduo and, following clues, managed to accurately capture the sixfold rising stock Seagate using the "finding daily anomalies + 13F institutional verification" framework, making a wild profit of $400,000 and achieving financial freedom.

MiCA reshuffle begins, Binance temporarily bids farewell to the EU

What Binance leaves behind is not scattered retail investors, but a whole batch of high-value users who are forced to liquidate and have almost nowhere to go.

How does Gate redo "buying and selling stocks" from the cryptocurrency world to the stock market?

The competition logic of exchanges has changed.

Visa and Mastercard join 140 giants to launch a new stablecoin, but the impact on the market landscape may still be limited

As an important milestone event in the stablecoin landscape, OUSD is likely to change the existing stablecoin landscape and significantly increase the adoption rate of stablecoins in the global financial system.

Circle CEO responds to OUSD's challenge: Stablecoins are a winner-takes-all business, and we will not slow down

OUSD was jointly launched by more than 140 giants, causing Circle's stock price to plummet in a single day. Circle's CEO personally wrote a response, clarifying USDC's moat from three aspects: network effects, liquidity, and regulation, and dismantling OUSD's three selling points of "free redemption...

Argentina vs Cape Verde: When a Record-Breaking Legend Meets an Unbreakable Underdog

WEEX exclusive pre-match analysis of Argentina vs Cape Verde, exploring Messi-led Argentina’s dominance and Cape Verde’s historic defensive breakout, with a breakdown of volatility, structure, and match dynamics.

Popular coins

Latest Crypto News

Read more
iconiconiconiconiconiconicon
Customer Support:@weikecs
Business Cooperation:@weikecs
Quant Trading & MM:bd@weex.com
VIP Program:support@weex.com