Bitcoin Hits New All Time High

or ATH for short

Good Morning & Happy Friday. The S&P 500 and Dow both ended just below the flatline, logging their third consecutive day of losses. The Nasdaq Composite bucked the trend, gaining around 0.3%.

Market sentiment was influenced by the House of Representatives’ approval of President Donald Trump’s sweeping tax bill, which now moves to the Senate. Concerns over the cost of the bill and its potential to worsen the national deficit pushed long-term Treasury yields higher. Investors are also watching for upcoming economic data, including building permits and new home sales figures due Friday.

In big crypto news, bitcoin hit new all time highs passing over $110,000! What a way to enter the long weekend.

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New Way to Invest for Banks?

Several major U.S. banks are reportedly in early discussions about creating a joint stablecoin, according to The Wall Street Journal. The talks involve entities co-owned by JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and other large commercial banks. While the concept is still in its preliminary stages and subject to change, the idea centers around issuing a stablecoin that could be used not only by the consortium’s members but also by other financial institutions.

Stablecoins are a form of cryptocurrency typically pegged to a fiat currency like the U.S. dollar and are often used by traders to move funds quickly within the crypto ecosystem. One potential model under consideration would allow access to the stablecoin beyond just the banks involved in its creation—potentially including institutions linked to the Clearing House and Early Warning Services. Additionally, some regional and community banks are said to be exploring the possibility of forming their own separate stablecoin consortium. As of now, the banks have not confirmed the report, and the details remain speculative.

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In Bitcoin We Trust

As we are writing this, Bitcoin is hitting new all-time highs of $111,700 and DeFi TVL has broken back above $120 billion, up from $85 billion in April. While many traders attribute the rally to softer inflation data, ETF inflows, and a temporary cooling in the U.S. China trade war, we at the BIR think there might be a deeper and more structural force at play: a growing loss of confidence in the fiscal discipline of the U.S. government. In a world of seemingly unlimited spending, investors are once again pouring into assets defined by their scarcity, and crypto, with its deterministic issuance schedules and permissionless architecture, stands apart.

At the center of the shift is the U.S. government’s swelling debt load. The Congressional Budget Office now forecasts deficits approaching 7% of GDP for the next several years, levels more commonly associated with wartime or deep recessions. But we are in neither. Unemployment remains low, and the U.S. economy continues to hum along, albeit with less momentum than last year. Yet rather than consolidate, Congress and the White House have pressed ahead with costly new tax and spending packages, even as Treasury yields spike and foreign buyers begin to show fatigue.

The most recent move, a sweeping tax bill aimed at stimulating growth in the face of tariffs, has spooked bond markets. Long-dated Treasury yields surged past 5% last week following a weak auction and Moody’s decision to strip the U.S. of its last triple-A credit rating. It’s no longer just economists warning about the consequences of unchecked borrowing, markets are finally starting to price in the risk premium of fiscal excess.

That risk premium is manifesting as higher yields, higher borrowing costs, and a growing sense that the U.S. dollar could begin to lose its status as a reserve currency. And in this environment, assets with programmatic scarcity, like Bitcoin and Ethereum, are once again finding favor.

Bitcoin’s rally in May was bolstered by over $40 billion in cumulative ETF inflows, but it’s more than a technical squeeze. There’s a psychological pivot occurring. With traditional safe havens like Treasurys underperforming, investors are seeking protection not just from inflation but from policy risk itself. Bitcoin, with its hard cap of 21 million coins and increasingly institutional access, offers an elegant alternative. Ethereum, meanwhile, is drawing renewed interest via decentralized finance protocols offering real yield on-chain, something that’s beginning to rival the returns of traditional fixed-income markets.

The rise of DeFi stablecoins is particularly worth noting. Protocols like Ethena and MakerDAO are enabling users to park capital in dollar-pegged assets that earn double-digit returns from on-chain activities such as collateralized lending, liquid staking, and delta-neutral basis trading. Unlike Treasurys, these instruments don’t rely on the credit of a single government, and they are increasingly being used as funding tools in both retail and institutional contexts.

This trend mirrors the rise of the Eurodollar system in the 1960s and 70s, when global banks created offshore dollar liabilities outside the reach of U.S. monetary policy. Today, DeFi is building a similar shadow liquidity system—one that’s global, digital, and indifferent to Capitol Hill’s debt ceiling theater.