US Tiger Securities: 'A brief hiking cycle would create near-term headwinds for Bitcoin without overturning our long-term BUY thesis'.

The analyst comments "A brief hiking cycle would create near-term headwinds for Bitcoin without overturning our long-term BUY thesis. Two or three 25bp hikes could weigh on BTC if they lift real yields and tighten liquidity. The impact should be more manageable if stronger productivity supports risk appetite and tightening ends without a recession. What matters is how far rates rise, how long they remain elevated, and how that path compares with market expectations. The fiscal incentive to lower financing costs remains substantial. Public debt is near 100% of GDP. CBO’s February baseline puts FY2026 net interest spending at 3.3% of GDP, absorbing roughly 19% of federal revenues, before a primary deficit of 2.6% of GDP. Today’s roughly three-percentage-point advantage of nominal growth over effective borrowing costs largely offsets primary borrowing. It leaves little room for slower nominal growth or higher refinancing costs. Even an optimistic AI scenario leaves debt rising. Real growth of 2.75% and GDP-price inflation of 2% imply nominal growth near 4.8%. With effective borrowing costs of 3.8%–4.0% and a primary deficit of 2%–3%, debt/GDP would still rise by roughly 1–2 percentage points annually. Under the same assumptions, stabilizing the ratio would require effective borrowing costs around 1.8%–2.8%. That shows why pressure for cheaper financing would survive stronger growth. For BTC, the principal near-term risk is tightening that proves larger or more persistent than markets expect. A limited cycle followed by stable or declining real yields would be more supportive, provided growth and liquidity hold up. Persistent primary deficits would meanwhile sustain pressure to contain financing costs, keeping financial repression relevant to Bitcoin’s monetary premium. That pressure does not guarantee Fed accommodation or protect BTC from a tightening-driven drawdown. It does explain why a few hikes would leave the longer-term fiscal argument intact."