Managing Editor’s Note: While most are in a frenzy over President Trump’s recent tariff announcement and headlines are fueling anxieties over the potential economic decline… there’s something the media has missed.
An ace up Trump’s sleeve that is going to shift the narrative of fear surrounding U.S. debt.
Senior crypto analyst Ben Lilly gets into all the details of this overlooked opportunity waiting for those who can ignore the noise and position themselves ahead of that shift…
President Trump has an ace up his sleeve.
It addresses a growing concern in the market… One that investors think threatens the stability of the United States economy and its currency.
That concern is debt.
To showcase what we mean, here are a few recent headlines from the media…
“Foreigners Dump U.S. Treasuries” – Barron’s
“US Bonds Rose as Recession Angst Fuels Haven Demand” – Bloomberg
“China’s Holdings of US Treasuries fall to the lowest level since 2009” – Financial Times
The media and investors are becoming increasingly worried about the United States finding buyers of its debt.
And the recent tariff negotiations are anything but pacifying for those fears.
But here’s what the media isn’t telling us…
A new buyer has entered the market. And it’s poised to push bond demand even higher. So high that there might not be enough debt to buy up in the market.
And it’s coming from an unlikely place that could become the biggest repository of U.S. debt in the world.
Let me explain.
Jeff and I recently got back from a trip to Washington, D.C.
The trip itself was to gain a first-hand perspective. That’s because the news coming out of Washington, D.C., has been overwhelmingly positive.
And over the years, this was unheard of. Senators like Elizabeth Warren looked to create an anti-crypto army, former Securities Exchange Commissioner Gary Gensler opened dozens of cases against crypto-related entities, and any legislation discussions were just opportunities for negative sound bites with limited good-faith attempts to form clear regulations.
The digital asset industry was vilified and attacked daily.
And since President Trump has entered the White House, we’ve seen a complete reversal creating seemingly unfathomable tailwinds to the industry.
He has an AI and Crypto Czar in the White House, an executive director of the President’s Council of Advisers on Digital Assets, a counselor to the U.S. Treasury Secretary on digital assets…
There are also subcommittees on digital assets across Congress, pro-crypto chairs sitting in all four of the most important committees in Congress that touch financial markets, and pro-crypto regulators in the SEC, CFTC, and others.
The last couple of months have seen a monumental shift in D.C. We covered these shifts in The Bleeding Edge in issues like The Permissionless Hash: An Unknown Upper Bound, Washington D.C. Puked, and The Market’s Silent Monster.
There has been so much change happening so quickly that we even held a live summit with subscribers of Permissionless Investor to go over the tidal wave of positive change because it was simply just so much to write about. (Permissionless Investor subs can revisit that right here.)
It’s why we needed to see all this change for ourselves.
And I’m happy to report that the degree of change and intended pace of progress has exceeded our expectations.
What we witnessed was unified support and alignment when it came to digital assets.
And one of those areas of alignment was on stablecoins. It was the number one priority for lawmakers and regulators.
Now, for those unfamiliar with stablecoins, they are tokenized assets that sit on blockchains like Ethereum, Solana, and others. Stablecoins are pegged to reference assets – usually another fiat currency – and can be freely transacted anywhere across the globe.
And their popularity is growing.
The market value of all stablecoins in the cryptocurrency market is approximately $220 billion, which represents more than 8% of the digital asset market. The most popular ones are those tied to the U.S. dollar.
But what’s important to note here is how these stablecoins maintain their peg to the U.S. dollar…
That is done using U.S. Treasuries.
The stablecoin market is a major buyer and holder of U.S. Treasuries.
Stablecoin issuers like Circle and Tether – the issuers behind the USDC and USDT stablecoins, respectively – make up $200 billion of the stablecoin market.
And between the two of them, they hold more than $150 billion worth of U.S. Treasuries.
If these two entities were a country, they would be around the 15th-largest holder of U.S. Treasuries in the world.
In fact, if Tether – the largest U.S. dollar stablecoin issuer – was a country, it would have been the seventh-largest buyer of U.S. Treasuries in 2024.
And that was during a period when the digital asset industry was vilified. Meaning these stablecoin issuers were treated like enemies instead of allies.
Which begs the question, what happens when the digital asset industry becomes a matter of national security? And these issuers become allies?
The cryptocurrency market was in a bear market during January 2019.
The combined market size of Tether and Circle was only $1.2 billion in size at the time. By the middle of 2022, the market size between the two swelled by more than 100x.
It was an incredible amount of growth in such a short period.
If stablecoins were to experience a similar growth pattern over the next couple of years, the market size would be trillions in size.
Their growth would be so massive that their holdings would easily surpass Japan as the largest holder of U.S. Treasuries at $1 trillion.
When we begin to frame the size of the stablecoin market in this context, it becomes clear why stablecoins are such a high priority in D.C. right now.
Economically, it’s on pace to be the biggest repository of U.S. debt in the years to come.
As I said above, it’s an ace up President Trump’s sleeve.
And after hearing from lawmakers while in D.C., it sounds as if stablecoins will have legislation in effect by summer followed by a broader digital asset framework bill with President Trump’s stamp of approval by early autumn.
That’s supersonic speed when it comes to Washington, D.C.
This catalyst is one being overlooked when it comes to future buyers of U.S. Treasuries.
If we go back to that headline about China from the Financial Times, the article states that “the value of U.S. sovereign debt held by Chinese investors fell by $57 billion to $759 billion in 2024.”
On its face, that sounds unbelievable, perhaps even scary. But when we look at this figure through the lens of how much demand is being seen in the stablecoin market, we see that Tether bought $33 billion worth of Treasuries in 2024.
When we see these two figures next to one another – $57 billion versus $33 billion – the situation doesn’t look so worrisome.
In fact, when we pair up this figure with the fact Congress is getting ready to catalyze future stablecoin growth, the U.S. might have an issue of not having enough Treasuries.
Suddenly the dialogue shifts on how to provide a market poised for growth with enough assets to continue growing. Stablecoins are becoming an ally to the U.S. financial plan.
But here’s the real kicker…
The stablecoin market is on the brink of a growth spurt. It’s poised to move from $220 billion in market size to trillions.
The influx of stablecoins into the digital asset industry means various protocols, applications, and blockchains are about to realize a tremendous amount of capital.
This means some of the biggest opportunities of the next few years will be realized on the networks, protocols, and applications that figure out how to build products and services around this incoming tidal wave.
And that’s one of the areas we’ve been focusing on of late at Permissionless Investor. We see the impending catalyst and are positioning ourselves to be in front of this trend that the market is blind towards.
And with the media’s attention fixated on Trump’s every utterance of tariffs, we have a real opportunity to be positioned ahead of the market.
Let’s ignore all the noise and see the real signal that represents a major opportunity.
Your Pulse on Crypto,
Ben Lilly
Senior Crypto Analyst, Brownstone Research
P.S. If you are interested in learning about the stablecoin market and a way to position yourself ahead of this impending trend, take a look at Permissionless Investor.
That’s where Jeff and I track find assets positioned to be the winners of the laws and regulations being written right now in D.C.
You can go here to learn more.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
