The 30-year US Treasury yield has surged to 5%, its highest level since July 2025, prompting concerns among crypto analysts that bitcoin may face downward pressure. This rise in yield is attributed to a combination of factors, including dissent within the Federal Reserve, elevated oil prices, and growing long-term inflation expectations.
As a result, bond yields are becoming more attractive, potentially leading to capital rotation out of risk assets like bitcoin. The dynamic is straightforward: as long as yields remain appealing and the Fed's monetary policy stays tight, investors have a viable alternative to risk, putting pressure on assets like crypto. Bitcoin is already feeling the strain, trading at $75,670, down 2% over 24 hours, while the Dollar Index hovers above 99. The rise in bond yields typically hurts bitcoin and other risk assets because it offers an almost risk-free return, making every dollar invested in bitcoin a dollar not earning that 5% yield.
Historically, rising Treasury yields and a stronger dollar have pressured crypto valuations by tightening financial conditions. The 10-year yield, a benchmark for borrowing costs, is also elevated, pointing to financial tightening and disincentivizing risk-taking. The central bank's decision to keep rates unchanged, combined with internal dissent, has pushed up expectations for higher-for-longer interest rates, contributing to the rise in bond yields. The oil price surge, driven by Trump's consideration of extending the blockade of Iranian ports, has also lifted inflation expectations, further driving yields higher.
As a result, the macro backdrop remains a headwind for crypto, with flows favoring yield and safety over volatility.