The 30-year US Treasury yield has reached 5%, a level only tested twice in the past two decades, prompting concerns among crypto analysts. This surge in bond yields is attributed to the Federal Reserve's hawkish stance, elevated oil prices, and rising long-term inflation expectations. As a result, bitcoin, already under pressure, may face further decline. The dynamic is straightforward: as long as yields remain attractive and the Fed's monetary policy stays tight, capital will seek alternative, lower-risk investments.
Bitcoin, being a macro asset, is particularly vulnerable to this shift. With the Dollar Index on the rise and the 10-year yield also elevated, financial conditions are tightening, making borrowing more expensive and disincentivizing risk-taking.
Experts warn that rising Treasury yields and a stronger dollar have historically pressured crypto valuations. The recent surge in oil prices, which briefly topped $125 per barrel, has further fueled inflation expectations, contributing to the bond yield surge. Until the Fed signals a near-term shift in its monetary policy, the macro backdrop is likely to remain a headwind for crypto assets.