The yield on the 30-year US Treasury note has reached 5%, its highest level since July 2025, prompting concerns among crypto analysts. This surge in bond yields is attributed to a combination of factors, including dissent within the Federal Reserve, elevated oil prices, and rising long-term inflation expectations.
As a result, bitcoin, the world's largest cryptocurrency, may face downward pressure. According to Diana Pires, chief business officer at sFOX, "the dynamic is simple: as long as yields remain attractive and monetary policy stays tight, capital has a real alternative to risk, which continues to pressure assets like crypto." The rising bond yields make non-yielding risk assets, such as bitcoin, less attractive, leading to capital rotation out of these assets. Furthermore, a stronger US dollar and rising Treasury yields have historically pressured crypto valuations by tightening financial conditions. The situation is exacerbated by the fact that the 10-year yield, a benchmark for borrowing costs, is also elevated, pointing to financial tightening.
The Federal Reserve's decision to leave rates unchanged, combined with internal dissent, has pushed up expectations for higher-for-longer interest rates, contributing to the rise in bond yields. The surge in oil prices, which has reached its highest level since 2022, is also lifting inflation expectations, further driving up bond yields.
Overall, the current macroeconomic environment, marked by rising bond yields and a strong US dollar, poses a significant challenge for bitcoin and other risk assets.