The 30-year US Treasury yield has reached a significant milestone, hitting 5% and sparking concerns among crypto analysts. This surge in bond yields can be attributed to several factors, including dissent within the Federal Reserve, elevated oil prices, and rising long-term inflation expectations. As a result, bitcoin, the world's largest cryptocurrency by market value, may face downward pressure.

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." The rise in bond yields typically hurts risk assets like bitcoin, as investors seek more attractive, low-risk returns. With the 30-year Treasury yielding 5%, investors may opt for this almost risk-free return over bitcoin.

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 increase in bond yields is not limited to the US, as yields are also rising in the UK and other parts of the world. The Federal Reserve's decision to leave rates unchanged, combined with internal dissent, has pushed up expectations for higher-for-longer interest rates.

This, in turn, has driven up bond yields. Matt Mena, senior crypto research strategist at 21shares, stated that "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 recent oil price surge, which saw Brent briefly top $125 per barrel, has also contributed to rising inflation expectations and, subsequently, higher bond yields. As Pires noted, "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."