The 30-year US Treasury yield has reached a two-decade high of 5%, sparking concerns among crypto analysts that rising yields will negatively impact bitcoin. As bond yields increase, they become a more attractive investment option, potentially leading to a capital rotation out of risk assets like bitcoin.
This shift is further exacerbated by a strengthening US dollar and rising long-term inflation expectations. According to experts, the combination of these factors is likely to continue pressuring crypto valuations, with bitcoin already experiencing a 2% decline over the past 24 hours. The rise in bond yields is not limited to the US, with yields also increasing in the UK and other parts of the world. The Federal Reserve's decision to maintain interest rates, coupled with internal dissent over easing language, has contributed to the surge in bond yields.
As a result, expectations for higher-for-longer interest rates have increased, leading to a 'hawkish signal' that is negatively impacting bitcoin. The current macroeconomic environment, characterized by rising oil prices and elevated inflation expectations, is expected to continue posing a headwind for crypto assets.