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 several factors, including elevated oil prices, rising long-term inflation expectations, and the Federal Reserve's decision to maintain interest rates, with some officials pushing back against easing. As a result, bitcoin, currently trading at $75,670, down 2% over 24 hours, may face downward pressure due to the attractive yields offered by bonds, making them a more appealing investment option. According to Diana Pires, chief business officer at sFOX, 'as long as yields remain attractive and the Fed's monetary policy stays tight, capital has a real alternative to risk, which continues to pressure assets like crypto.' The rising bond yields also weigh on 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 increase in bond yields is not limited to the US, as yields are also rising in the UK and other parts of the world. The Federal Reserve's internal dissent, with three officials pushing back against easing language, has caught markets off guard, leading to higher expectations for interest rates and contributing to the surge in bond yields. Matt Mena, senior crypto research strategist at 21shares, described the dissent as 'a classic hawkish signal' that is negatively impacting bitcoin. The oil price rally, with Brent briefly topping $125 per barrel, is also lifting inflation expectations, further contributing to the increase in bond yields.

As 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.'