- Higher Treasury yields make bonds more attractive, adding pressure on Bitcoin and crypto.
- U.S. 10-year yield hits 5.21%; 30-year reaches ~5.51%, highest since 2004.
- Bitcoin futures open interest falls 2% as rising bond yields add to crypto market stress.
Bitcoin traded near $84,000 as rising bond yields weighed on the crypto market. Strong U.S. business data fueled expectations for further rate hikes, while the token recovered from a dip below $83,000.
The U.S. 10-year Treasury yield touched 5.21% during Friday’s trading. The 30-year yield reached about 5.51%, its highest since 2004. Those moves extended a global selloff in government debt.
BTC traded within a 24-hour range of $83,288 to $85,177 as selling pressure continued across the crypto market. The decline also affected major altcoins, with Ethereum, XRP, and Solana recording losses earlier in the session.
Why Are Bond Yields Rising Now?
Selling accelerated after Wednesday’s U.S. business survey. S&P Global’s flash Composite PMI rose to 58.4 in September from 56.0 in August. It marked the strongest expansion in business activity since July 2021.
Firms also reported the sharpest increase in input costs in nearly four years. Higher fuel and transport costs added to the pressure. Hiring strengthened, while supply delays and staff shortages left some companies struggling to meet demand.
Selling prices rose faster than in August, though competition limited increases in some services. Their growth remained below the pace recorded from March through July. S&P Global nevertheless said its combined activity, jobs, and cost indicators pointed toward further rate increases.
These pressures followed the Fed’s quarter-point rate increase on September 16. Officials raised the federal funds target range to 3.75%–4.00% in a unanimous vote. Their statement described inflation as elevated and kept the focus on restoring price stability.
Traders were already looking beyond that decision. CME FedWatch showed 4.75%–5.00% as the most likely range for June 2027. That implied four more quarter-point increases, based on futures pricing at that time.
Government borrowing added another concern for bond investors. Reuters linked the broader selloff to heavy public spending, strong growth, and high energy costs. These factors raised concerns about persistent inflation.
How Do Higher Bond Yields Affect Bitcoin?
Those rate expectations change the choices facing investors. Government bonds offer scheduled interest payments, while holding Bitcoin alone produces no interest income. Higher treasury returns increase the income investors give up when choosing the cryptocurrency.
A rising yield also reflects a falling bond price. The promised payments on an existing fixed-rate bond stay the same. Paying less for those payments raises the return available to a new buyer.
The effect extends to financing costs. The Reserve Bank of Australia explains that government yield curves help shape borrowing rates across the economy. Banks, companies, and households therefore face changes in funding costs as market rates adjust.
That pressure was visible in U.S. housing finance. Reuters put 30-year mortgage rates near 7%, roughly one percentage point above their prewar level.
However, the price changes do not establish how much money moved directly from Bitcoin into government debt. That requires evidence of investment flows, beyond changes in market prices.
How Did Crypto Traders Respond?
Futures data showed a decline in open positions as Bitcoin retreated, with futures open interest falling about 2%. Open interest tracks outstanding contracts and is influenced by price movements.
The decline in open interest suggests that some traders may have been closing positions during the move. However, open interest alone does not identify forced liquidations or show which side initiated each trade. CME Group treats it as one measure to assess alongside other market data.
Does the Evidence Point to Lasting Pressure?
Longer-term data suggest a weak relationship between Bitcoin and bond yields. The correlation between Bitcoin’s daily returns and changes in the 10-year Treasury yield stood at -0.18 over 90 days. Over one year, the reading was -0.03, indicating little consistent connection between the two markets.
Both figures are close to zero, indicating little consistent linear relationship in those periods. They do not support a rule that every rise in yields brings a Bitcoin decline. Current market stress and longer-term price behavior remain separate questions.
Attention now turns to the Fed’s October 27–28 meeting. Its latest statement cited solid growth, resilient spending, and strong capital investment.
Related: US Treasury Buys Back $6B of Debt as Japan’s Bond Yields Surge: What It Means for Bitcoin and Crypto
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