The 30-year US Treasury yield has surged to 5%, a level only reached twice in the past two decades, prompting concerns among crypto analysts. This increase in yield makes bonds a more attractive investment, potentially leading to a decline in assets like bitcoin.
As the yield on the 30-year Treasury note rises, it becomes a more appealing option for investors seeking a relatively risk-free return, which could result in capital flowing out of riskier assets like cryptocurrencies. The rise in bond yields is attributed to various factors, including the Federal Reserve's decision to maintain interest rates and the recent surge in oil prices, which has lifted inflation expectations. According to experts, the dynamic is straightforward: as long as yields remain attractive and the Fed's monetary policy stays tight, capital will have a real alternative to risk, putting pressure on assets like crypto. The current market conditions, with rising bond yields and a strengthening dollar, are likely to continue pressuring crypto valuations.
The increase in yields is not limited to the US, as bond yields are also rising in other parts of the world, such as the UK. The Federal Reserve's decision to keep interest rates unchanged, combined with the internal dissent among voting officials, has caught markets off guard and pushed up expectations for higher-for-longer interest rates.
This, in turn, is contributing to the rise in bond yields. The oil price surge, which has reached its highest level since 2022, is also playing a role in lifting inflation expectations and pushing yields higher. As a result, the macro backdrop remains a headwind for crypto, with flows favoring yield and safety over volatility.