The 30-year US Treasury yield has reached 5%, sparking concerns among crypto analysts that bitcoin may feel the pinch. This significant milestone has been reached only twice in the past twenty years, prompting Holger Zschaeptiz to react with a simple 'Ouch.' His sentiment is echoed by many in the crypto space, who view rising yields as a challenge for bitcoin, given its status as a macro asset and the world's largest cryptocurrency by market value.

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, depending on liquidity and momentum.' With the Dollar Index (DXY) on the rise, bitcoin is already under pressure, trading at $75,670 - a 2% drop over 24 hours. The DXY is hovering above 99, looking to extend its 0.5% gain from Wednesday.

The surge in bond yields typically hurts risk assets like bitcoin because when the US government issues bonds with higher yields, they become more attractive to investors seeking almost risk-free returns. Every dollar invested in bitcoin is a dollar not earning that 5% yield, leading to capital rotation out of non-yielding risk assets. Rising yields also impact gold, which fell over 1% to a one-month low.

Vikram Subburaj, CEO of Giottus exchange, noted that 'Rising Treasury yields and a stronger dollar have historically pressured crypto valuations by tightening financial conditions.' The 10-year yield, a benchmark for borrowing costs, is also elevated, pointing to financial tightening and disincentivizing risk-taking. The recent hawkish dissent within the Federal Reserve, where three officials pushed back against easing language, has caught markets off guard, pushing up expectations for higher-for-longer interest rates and impacting bond yields. Matt Mena, senior crypto research strategist at 21shares, described the Fed's decision as a 'classic hawkish signal' that bitcoin is feeling.

The oil price surge, with Brent briefly topping $125 per barrel, is also lifting inflation expectations, contributing to the bond yield surge. As Diana Pires stated, 'Inflation is not convincingly back to target, and the Fed is not signaling a near-term shift.

Markets may want clarity on cuts, but the Fed is not giving yet. Until that changes, flows will keep favoring yield and safety over volatility. For crypto, that means the macro backdrop remains a headwind, not a tailwind.'