The yield on the 30-year US Treasury note has surged to 5%, a level only reached twice in the past two decades, prompting concerns among crypto analysts that rising yields could negatively impact bitcoin. As bond yields increase, they become more attractive to investors, potentially leading to a capital rotation out of risk assets like bitcoin. This is because every dollar invested in bitcoin is a dollar not earning the nearly risk-free 5% yield offered by the Treasury note.
According to Diana Pires, chief business officer at sFOX, 'as long as yields remain attractive and the Fed's monetary policy stays tight, capital has a real alternative to risk, which continues to pressure assets like crypto.' Bitcoin is already under pressure, trading at $75,670, down 2% over 24 hours, while the Dollar Index hovers above 99. Rising bond yields typically hurt risk assets, including bitcoin, as they become less appealing compared to the relatively safe return offered by government bonds. Vikram Subburaj, CEO of Giottus exchange, noted that 'rising Treasury yields and a stronger dollar have historically pressured crypto valuations by tightening financial conditions.' The recent surge in oil prices, which briefly topped $125 per barrel, has also lifted inflation expectations, contributing to the increase in bond yields. As a result, the macro backdrop remains a headwind for crypto, with flows favoring yield and safety over volatility.