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 development, combined with elevated oil prices and long-term inflation expectations, is pushing bond yields higher and making them more attractive to investors.
As a result, capital may shift away from riskier assets like bitcoin, which is already under pressure due to an uptick in the Dollar Index. The dynamic is straightforward: as long as yields remain attractive and the Fed's monetary policy stays tight, investors have a viable alternative to risk, which continues to pressure assets like crypto. The rising bond yields typically hurt bitcoin and other risk assets because they offer a nearly risk-free return, making them more appealing to investors. Every dollar invested in bitcoin is a dollar not earning the 5% yield, leading to capital rotation out of non-yielding risk assets.
Rising yields also weigh on gold, which has fallen to a one-month low. The 30-year yield is not the only one rising; the 10-year yield, a benchmark for borrowing costs, is also elevated, pointing to financial tightening and disincentivizing risk-taking. The Fed's decision to keep rates unchanged, combined with internal dissent, has pushed up expectations for higher-for-longer interest rates, contributing to the surge in bond yields.
The oil rally, which has lifted inflation expectations, is also a factor in the bond yield surge. As a result, the macro backdrop remains a headwind for crypto, with flows favoring yield and safety over volatility.