The 30-year US Treasury yield has surged to 5%, sparking concerns among crypto analysts that bitcoin may face downward pressure. This yield level has only been reached twice in the past two decades, prompting Holger Zschaeptiz to react with alarm. The rising yields, combined with a stronger US dollar, are likely to lead to capital rotation out of risk assets like bitcoin and into more attractive, low-risk investments. According to Diana Pires, chief business officer at sFOX, the current dynamic favors yields over risk, putting pressure on 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 increase in bond yields typically hurts risk assets, as investors opt for the relatively safe returns offered by government bonds. Vikram Subburaj, CEO of Giottus exchange, notes 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 disincentivizing risk-taking. The Federal Reserve's decision to leave rates unchanged, combined 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 surge in oil prices, which reached their highest level since 2022, is also lifting inflation expectations and driving yields higher. As a result, the macro backdrop remains a headwind for crypto, with flows favoring yield and safety over volatility.