An Unsustainable Fiscal Path — and the Political Constraints That Lock It In
Strive CEO Matt Cole has laid out a sweeping macro thesis centered on the U.S. Treasury market, the dollar, and Bitcoin. A generational macro shift, he writes, is taking shape right now.
Cole references Stanley Druckenmiller's recent Wall Street Journal op-ed titled "Let the Bond Market Speak." The current U.S. fiscal position, Cole argues, is deeply irresponsible: fiscal deficits running near 6% of GDP with the economy close to full employment and inflation still above target. Entitlement spending on Social Security and healthcare continues to expand, effectively shifting the fiscal burden onto future generations. Attempting to suppress long-term Treasury yields does nothing to address the root cause.
Druckenmiller's economic logic is sound, Cole acknowledges — suppressing yields merely postpones the fiscal reckoning that higher rates would otherwise force on Washington. But the real constraint on fiscal reform is political, not economic.
As early as the mid-2010s, Cole had concluded that relying on bond-market pressure to impose sufficient fiscal discipline on the United States was unrealistic. That realization was a key reason he initially turned to Bitcoin. Druckenmiller himself has invested in Bitcoin and other hard assets, which leads Cole to believe they share the same fundamental diagnosis.
Cole characterizes Druckenmiller's article less as a prediction of what Washington will do and more as a warning about what it should do before it is too late — a near-desperate appeal from a top macro investor to let markets discipline a political system that can no longer discipline itself. Cole says he hopes policymakers will listen, but concedes they will not.
Political Incentives Define the Policy Boundary
Druckenmiller himself identified the political constraint explicitly: no political party will campaign on entitlement reform. Fiscal plans that work on paper often cannot win elections.
Cole draws a critical distinction. Treasury officials and other appointed managers may be intelligent, responsible, and genuinely committed to strengthening the country, but their room to maneuver is ultimately set by elected politicians and the voters behind them.
He points to Treasury Secretary Scott Bessent as an example. Bessent clearly understands the fiscal problem and likely shares Druckenmiller's basic diagnosis. Yet running the Treasury requires operating within a political system whose policy direction is set by elected officials — it cannot simply follow the optimal path on a macroeconomic spreadsheet.
The Department of Government Efficiency (DOGE) illustrates the point further. Elon Musk, whom Cole calls perhaps the most operationally capable business executive of this generation, entered government with an explicit mandate to slash spending. Institutional and political forces proved stronger. DOGE failed to alter the fiscal trajectory; deficits kept widening.
This is not an indictment of anyone's competence or intentions, Cole stresses. The constraints are structural. Investing must be grounded in reality, not in the world we wish existed.
5.25%–5.85%: The Policy Threshold for Treasuries
Today's Treasury market, Cole notes, is far from a fully free market. The Federal Reserve currently holds roughly $1.6 trillion in Treasuries with remaining maturities beyond 10 years — approximately 28% of outstanding supply in that maturity bucket.
After long-term yields approached their highest levels in nearly two decades, the Treasury doubled planned buyback sizes for 10- to 30-year bonds and signaled that future operations could be scaled up significantly. These moves reveal the government's playbook when confronted with rising long-end yields.
The Treasury has clearly shown sensitivity to rising long-term rates, yet the capital deployed has been insufficient to reverse the yield trend. Markets did not treat the initial buyback announcement as a turning point.
Cole invokes Druckenmiller's warning: once the market concludes that the Treasury is propping up bond prices and capping long-term yields, every further tick higher in yields becomes a fresh test of the policy floor.
The Treasury, Cole believes, will ultimately regret acting so early with such limited firepower. It exposed its sensitivity to long-end yields without deploying enough capital to change the trend — effectively inviting the market to probe for the real policy red line.
For several years, Cole has tracked a key resistance zone on the 10-year yield chart: 5.25%–5.85%. He considers it the most important test zone in the current secular rise in long-term rates. The range was not drawn from recent price action. It stems from his fundamental assessment of the U.S. debt trajectory: fiscal deterioration will naturally push yields higher, and at some level the political and financial costs of tolerating further increases become unbearable, forcing the Treasury or the Fed to act.
Should the 10-year yield enter 5.25%–5.85%, the headlines practically write themselves: yields at levels not seen since around 2007, but this time with far higher debt loads and a much more strained fiscal position.
The Chain Reaction Once Yields Break Higher
Cole maps out a clear transmission mechanism. Price moves first; narrative follows. Once Treasuries fall far enough, the market will quickly begin discussing "Treasury market dysfunction," "destabilizing government financing," and even "a crisis in the world's most important bond market."
That narrative itself ratchets up political pressure on the government to act. Mortgage rates, government interest expense, equity valuations, and broader financial conditions all come under increasing strain. Each additional basis point of yield adds to the government's interest burden and fiscal stress.
Notably, the Treasury has already begun reacting even before yields entered Cole's target zone.
If yields do reach that range, Cole expects the Treasury or the Fed to blink first and intervene at scale. The toolkit could include dramatically expanded Treasury buybacks, heavier reliance on short-term bill financing, drawdowns of the Treasury General Account (TGA), renewed expansion of the Fed's balance sheet, explicit or implicit yield management, or some combination of all of these.
He would not be surprised if the eventual scale of intervention dwarfs anything currently announced.
Before large-scale policy action materializes, however, financial markets may endure significant stress. Rising long-term yields would compress equity valuations, and AI is simultaneously leading more investors to question whether traditional corporate moats can be sustained. Both forces hitting at once would put additional pressure on stocks and other risk assets.
The Dollar as Release Valve — and Bitcoin's Opportunity
As fiscal conditions continue to deteriorate and policymakers refuse to let long-term rates fully reflect that deterioration, the adjustment pressure does not vanish. It migrates. Cole argues the dollar will serve as the system's release valve.
Bitcoin, he writes, deserves even closer attention because the policy endgame is becoming increasingly clear. During the final leg higher in yields, will Bitcoin sell off sharply alongside risk assets, or will it hold firm and keep climbing? Cole puts the odds at roughly even.
If Bitcoin does drop meaningfully at that juncture, he would treat it as a potentially once-in-a-lifetime opportunity to add exposure, since policymakers will ultimately be forced to intervene on a much larger scale. But he would not restructure his entire portfolio to wait for that dip — the current macro environment is already favorable enough. Anyone without a position, he argues, should start building one now. A pullback would be a gift; but the market may also front-run the eventual policy pivot and shrug off short-term pressure entirely.
From a traditional fixed-income perspective, 5.25%–5.85% has always been a zone where Cole would look to add duration aggressively. If the Treasury or Fed acts as he expects, long-dated Treasuries could perform very well as policymakers push yields back down. But Strive is not running a fixed-income strategy — it is running a Bitcoin strategy. In this macro environment, the goal is to maximize Bitcoin exposure while maintaining prudence.
Rather than holding an asset whose yield is being actively suppressed by policymakers, Strive prefers to amplify Bitcoin exposure in precisely this kind of macro backdrop, Cole explains.
A Structurally Weaker Dollar and Uncharted Territory for Bitcoin
Cole circles back to his earlier dollar thesis. Druckenmiller is right that a government propping up a price against fundamentals will eventually fail. That does not mean, however, that the government cannot suppress the targeted price for a considerable period.
If Washington refuses to cut spending meaningfully, then among the politically viable options, suppressing long-term yields and allowing the dollar to weaken may be the least costly path. The correct solution is a more conservative, sustainable fiscal policy — but that road is politically blocked. At current debt levels, letting long-term yields spiral higher could quickly trigger a more immediate Treasury market crisis.
Financial repression through policy-driven low long-term rates and a weaker dollar are not ideal outcomes, but they remain more palatable than allowing the U.S. government's financing apparatus to unravel rapidly under market pressure. That is why the dollar becomes the release valve: the Treasury and Fed can cap long-term yields, but they cannot make fiscal imbalances disappear. The adjustment cost must surface somewhere, and currency depreciation is the politically easier choice.
Cole does not consider a Dollar Index falling into the high 60s or low 70s to be an unimaginable extreme. The dollar would be at modern-era lows, though not unprecedented on a longer historical scale.
Bitcoin has repeatedly benefited from weak-dollar environments, but it has never experienced a period in which the Dollar Index trended to those levels. Bitcoin was born after the 2008 dollar trough; its entire history has unfolded with the dollar either recovering from or trading well above that low. A secular new low in the dollar would represent a truly novel macro environment for Bitcoin.
The 'Grand Slam Scenario': Multiple Forces Converging
Cole outlines what he calls the most explosive scenario — multiple tailwinds firing simultaneously. Dollar purchasing power erodes, expanding the global pool of capital seeking scarce assets. As Bitcoin's credibility as a monetary asset grows, it captures an increasing share of that capital. AI makes technology and product supply more abundant, undermining traditional corporate moats over time, while Bitcoin's scarcity cannot be replicated or diluted by competitors.
These drivers are not independent; they compound. Global capital seeking scarcity keeps growing, Bitcoin's outperformance among scarce monetary assets draws an ever-larger share of that capital, and Strive's capital structure amplifies the upside from Bitcoin's appreciation.
Cole summarizes the path he has been tracking for years: the 10-year yield enters the 5.25%–5.85% resistance zone, the Treasury market narrative shifts to crisis, Washington is forced to deploy capital at scale, the pressure that should have been reflected in long-term yields gets redirected into the dollar, and the dollar's secular downtrend accelerates.
If the bond market triggers a temporary Bitcoin drawdown along the way, he wants to buy aggressively. If Bitcoin front-runs the policy endgame and never offers a meaningful pullback, he wants to already be positioned.
Cole echoes Druckenmiller's call to "let the bond market speak" and shares his frustration that Washington continues to defer the fundamental problem, leaving the bill for the next generation. But the bond market will need to issue a far louder warning before policymakers intervene at sufficient scale — and when that moment arrives, they are more likely to muffle the signal than to undertake the root-and-branch fiscal restructuring that would actually solve the problem.
His conclusion is a single sentence: the market may still be underestimating Bitcoin's long-term upside.