The 30-year US Treasury yield has surged to 5%, sparking concerns among crypto analysts that this could lead to a decline in bitcoin's value. This yield level has only been reached twice in the past two decades, prompting Holger Zschaeptiz to react with an 'Ouch.' The rising yields are attributed to a combination of factors, including dissent within the Federal Reserve, high oil prices, and increasing long-term inflation expectations. As a result, bond yields are becoming more attractive, leading to a potential capital rotation out of risk assets like bitcoin. According to Diana Pires, chief business officer at sFOX, '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.' Bitcoin is already under pressure, trading at $75,670, down 2% over 24 hours, while the Dollar Index hovers above 99.

The rising bond yields typically hurt risk assets like bitcoin, as they offer a nearly risk-free return, making them more appealing to investors. 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 10-year yield, a benchmark for borrowing costs, is also elevated, pointing to financial tightening and increased borrowing costs.

The Fed'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. As Matt Mena, senior crypto research strategist at 21shares, stated, 'The Fed's decision to keep rates steady wasn't the shocker, but those three dissenters calling for a strike on any easing guidance threw a bucket of ice on the market's pivot party.' The oil rally, with prices surging to their highest since 2022, is also lifting inflation expectations, further fueling the rise in bond yields. According to Pires, 'Inflation is not convincingly back to target, and the Fed is not signaling a near-term shift. Markets may want clarity on cuts, but the Fed is not giving yet.

Until that changes, flows will keep favoring yield and safety over volatility. For crypto, that means the macro backdrop remains a headwind, not a tailwind.'