The 30-year US Treasury yield has surged to 5%, sparking concerns among crypto analysts that bitcoin may face downward pressure. This yield level has only been reached twice in the past two decades, prompting Holger Zschaeptiz to react with alarm.
The rising yields are attributed to a combination of factors, including the Federal Reserve's decision to keep interest rates steady and the recent oil price rally. As a result, investors are opting for the relatively safe and attractive returns offered by bonds, rather than risking their capital in cryptocurrencies like bitcoin. The strengthening US dollar is also contributing to the downward pressure on bitcoin, which has already declined by 2% in the past 24 hours. According to experts, the rising bond yields and tightening financial conditions are likely to continue weighing on crypto valuations.
The situation is further complicated by the internal dissent within the Federal Reserve, with some officials pushing back against easing language, which has led to increased expectations of higher interest rates. The global economy is also experiencing rising bond yields, with the UK and other countries seeing similar trends.
The surge in oil prices, which has reached its highest level since 2022, is also driving up inflation expectations and contributing to the higher bond yields. As Diana Pires, chief business officer at sFOX, noted, the current dynamic is simple: as long as yields remain attractive, capital will have a real alternative to risk, putting pressure on assets like crypto.
The outlook for bitcoin and other risk assets remains uncertain, with the macro backdrop remaining a headwind rather than a tailwind.