The yield on the 30-year US Treasury note has surged to 5%, a level only reached twice in the past two decades, prompting concerns among crypto analysts. This increase in bond yields is attributed to a combination of factors, including the Federal Reserve's hawkish stance, elevated oil prices, and rising long-term inflation expectations. As a result, investors may opt for the relatively safe and attractive returns of bonds over riskier assets like bitcoin.
The rising yields have already led to a decline in bitcoin's value, with the cryptocurrency trading down 2% over 24 hours. Experts warn that the current economic environment, characterized by financial tightening and a strong dollar, may continue to exert downward pressure on crypto valuations. The situation is further complicated by the internal dissent within the Federal Reserve, with some officials pushing back against easing monetary policy, which has led to increased expectations for higher interest rates.
The surge in oil prices, which has reached its highest level since 2022, is also contributing to higher inflation expectations and, in turn, rising bond yields. According to analysts, the current macroeconomic backdrop remains a significant headwind for bitcoin and other risk assets, making it challenging for them to gain traction.