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Story: Paulson Warns $35 Trillion Debt Could Trigger Treasury Crash and Slam Crypto Markets

By Dan Saada

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April 2025 Yield Spike Shows What's at Stake. Back in April 2025, Treasury yields jumped hard during a trade war scare.

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Crypto Gets Crushed When Dollar Liquidity Dries Up. A Treasury bond crash would hit cryptocurrencies hard through tightening dollar liquidity.

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Washington Isn't Buying the Warning. Current Treasury Secretary Scott Bessent dismissed similar warnings from JPMorgan CEO Jamie Dimon.

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Henry Paulson sees trouble coming. The former Treasury Secretary thinks America's $35 trillion debt pile could blow up the bond market, and he wants an emergency plan ready…

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Paulson ran the Treasury during the 2008 meltdown, so he knows what panic looks like. He told reporters the potential collapse in demand for U.S.

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Back in April 2025, Treasury yields jumped hard during a trade war scare. Bonds were supposed to be the safe bet when stocks tanked, but that's not what happened.

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The debt numbers are pretty wild when you look at the trajectory. The U.S. owed around $10 trillion back in 2008. Now it's over $35 trillion.

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30-year Treasury yields already crossed the 5% threshold. The last time the market saw that kind of sustained level was during the inflation spike in October 2023.

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A Treasury bond crash would hit cryptocurrencies hard through tightening dollar liquidity. Risk assets always take the first punch in that scenario, and crypto is basically the…

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The April 2025 episode proved Bitcoin's safe-haven story doesn't hold up during real market stress. Crypto sold off right alongside equities when Treasury yields surged.

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Crypto's behavior during the March 2020 crash told a similar story. Bitcoin fell hard when liquidity dried up, trading more like a tech stock than digital gold.

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The correlation between Bitcoin and traditional risk assets remains tight during periods of market stress. That's a problem for the digital-gold narrative.

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See also: SEC Hits Crypto Executive With $16M Fraud Charges Over Fake Insurance Claims

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Ethereum's situation is even more precarious. Without Bitcoin's scarcity story, Ethereum relies more on network utility and developer activity.

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The gap between market signals and government acknowledgment is pretty wide right now. Bond investors are clearly worried about something—you can see it in the yield levels.

The Currency Analytics

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