The 30-year US Treasury yield has reached 5%, a level only seen twice in the past two decades, prompting concerns among crypto analysts. This surge in bond yields is attributed to the Federal Reserve's hawkish stance, elevated oil prices, and rising long-term inflation expectations.
As a result, bitcoin, currently trading at $75,670, is under pressure. The increase in bond yields makes them a more attractive investment, potentially leading to a capital rotation out of risk assets like bitcoin.
Experts warn 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, indicating financial tightening and disincentivizing risk-taking. The Federal Reserve's decision to maintain interest rates, combined with the internal dissent among voting officials, has pushed up expectations for higher-for-longer interest rates, contributing to the rise in bond yields.
The current economic climate, with oil prices surging and inflation expectations increasing, is likely to continue affecting bitcoin and other risk assets.