Who is going to buy the bonds, indeed. Ultimately, bitcoin as a protocol is positioned to act as the issuer of a widely accepted, immutable, permissionless money. The market is going to compare that money against other money technologies, like government issued treasury bonds.

If the risk-adjusted appreciation of the bitcoin market outcompetes the risk-adjusted yields of traditional government bond markets then bitcoin will attract capital that has historically been allocated to bonds.

There really is no practical world where the two systems coexist. Government issued bonds would have to set their rates to match Bitcoin’s annual appreciation. Even at bitcoin’s worst 4 year performance, you’re looking at 2-year / 10-year treasuries needing to be priced at 10%. Probably closer to 20-25%. Absolute economic chaos would ensue if that happened.