Bitcoin is feeling the heat as U.S. Treasury yields rise, sparking concerns about another Federal Reserve rate hike. The crypto market cap has dropped to around $2.17 trillion amid ongoing capital outflows from digital assets. This comes at a time when the 30-year Treasury yield hit 5.28% on July 31, marking its highest point since 2007.
Analyst Benjamin Cowen highlighted that the 10-year Treasury yield might soon surpass the 5% threshold again. He noted in a recent social media post that even when the Fed cut rates between 2024 and 2025, the 30-year yield remained elevated, suggesting that rate cuts don’t always translate to lower yields. Cowen argues the Federal Open Market Committee may have cut rates prematurely, which could keep long-term yields under pressure.
Impact on Crypto Markets
Higher Treasury yields usually signal investors’ worries about inflation and economic stability, prompting them to pull back from riskier assets like cryptocurrencies. Past Friday, U.S.-listed crypto funds saw significant outflows, with Bitcoin alone losing $265.37 million. This shift toward safer assets is typical when borrowing costs rise and Federal Reserve tightening looms.
Stablecoin supply has also declined by $14.27 billion since late May, with much of that capital now idle, further indicating reduced enthusiasm for crypto investments. As the Fed potentially prepares for another rate increase, the flow of money into digital currencies may tighten even more.
This content is for informational purposes only and should not be considered financial advice.
