The yield on the 30-year US Treasury note has surged to 5%, its highest level since July 2025, sparking concerns among crypto analysts. This increase in bond yields is 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, is likely to face downward pressure. According to Diana Pires, chief business officer at sFOX, 'as long as yields remain attractive and 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 opt for the relatively safer and more attractive returns offered by government bonds.
With the US government needing to borrow money, it issues bonds, and the yield on these bonds is the annual return earned by bond investors. When yields rise, bonds become more attractive, leading to a capital rotation out of non-yielding risk assets like bitcoin.
The 30-year Treasury yield is not the only one rising, as the 10-year yield, which serves as a benchmark for borrowing costs, is also elevated, pointing to financial tightening. This situation, where borrowing becomes costly, disincentivizes risk-taking in both financial markets and the economy. The central bank's decision to keep rates unchanged, combined with internal dissent, has pushed up expectations for higher-for-longer interest rates, contributing to the rise in bond yields.
The oil price surge, driven by concerns over Iranian ports, has also lifted inflation expectations, further driving up yields. As a result, the macro backdrop remains a headwind for crypto, with the dynamic favoring yield and safety over volatility.