The yield on the 30-year US Treasury note has surged to 5%, its highest level since July 2025, prompting concerns among crypto analysts that rising yields could hinder bitcoin's performance. This milestone has only been reached twice in the past two decades, sparking anxiety among investors.
The current dynamic, where yields remain attractive and the Fed's monetary policy stays tight, provides a viable alternative to risk, thereby exerting pressure on assets like crypto. Bitcoin, already under pressure due to an uptick in the Dollar Index, traded at $75,670, down 2% over 24 hours.
The rising bond yields typically hurt risk assets, including bitcoin, as they become more attractive to investors seeking returns. Every dollar invested in bitcoin is a dollar not earning the 5% yield from the Treasury, leading to capital rotation out of non-yielding risk assets.
The surge in bond yields, coupled with a stronger dollar, has 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.
This situation discourages risk-taking in both financial markets and the economy. The Fed's decision to keep rates unchanged, along with internal dissent from three voting officials, has pushed up expectations for higher-for-longer interest rates, contributing to the rise in bond yields.
The oil price surge, which reached its highest level since 2022, 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.