The yield on the 30-year US Treasury note has surged to 5%, its highest level since July 2025, sparking concerns among crypto analysts that rising yields will hinder bitcoin's performance. This milestone has been reached only twice in the past two decades. The increase in bond yields is attributed to the Federal Reserve's hawkish stance, elevated oil prices, and rising long-term inflation expectations. As a result, investors may opt for the relatively safe and attractive returns offered by bonds, potentially leading to a decline in bitcoin's value.
According to Diana Pires, chief business officer at sFOX, the current dynamic favors bonds over riskier assets like crypto, as long as yields remain high and the Fed's monetary policy remains tight. Bitcoin is already experiencing downward pressure, trading at $75,670, down 2% over 24 hours, while the Dollar Index hovers above 99. The rise in bond yields typically hurts risk assets like bitcoin, as investors seek the almost risk-free returns offered by bonds. Every dollar invested in bitcoin means forgoing the 5% yield offered by the 30-year Treasury, leading to capital rotation out of non-yielding risk assets.
The 10-year yield, a benchmark for borrowing costs, is also elevated, pointing to financial tightening and increased borrowing costs. The UK and other parts of the world are also experiencing rising bond yields.
The Federal Reserve's decision to maintain interest rates, combined with internal dissent from three voting officials, has pushed expectations for higher-for-longer interest rates, contributing to the surge in bond yields. The oil price rally, which reached its 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.