The 30-year US Treasury yield has surged to 5%, a level only reached twice in the past two decades, sparking concerns among crypto analysts. This increase 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, is expected to face further challenges.
With the yield on the 30-year Treasury note offering an attractive, almost risk-free return, investors may opt for this over riskier assets like bitcoin. The rise in bond yields typically leads to capital rotation out of non-yielding risk assets, including bitcoin and technology stocks, and also weighs on gold prices. The current economic environment, characterized by financial tightening and increased borrowing costs, is likely to continue pressuring crypto valuations. The recent surge in oil prices has further lifted inflation expectations, contributing to the increase in bond yields.
With the Fed showing no signs of easing monetary policy, the macro backdrop remains unfavorable for crypto assets.