The 30-year US Treasury yield has surged to 5%, a level only reached twice in the past two decades, prompting concerns among crypto analysts that bitcoin may face downward pressure. This development, combined with elevated oil prices and rising long-term inflation expectations, is making bonds more attractive and potentially leading to capital rotation out of risk assets like bitcoin.
As a result, bitcoin is already under pressure, trading down 2% over 24 hours, while the Dollar Index is looking to extend its gains. The rise in bond yields is not limited to the US, with yields also increasing in the UK and other parts of the world. The Federal Reserve's decision to maintain interest rates, coupled with internal dissent from three voting officials, has pushed up expectations for higher-for-longer interest rates, contributing to the surge in bond yields.
According to experts, this hawkish signal is likely to impact bitcoin, which is often seen as an indicator of risk. The current macro backdrop, characterized by tightening financial conditions and rising yields, is expected to remain a headwind for crypto valuations.