Analysts see 10-year Treasury yield hitting 6%. Bitcoin bulls shouldn't panic
Why yields are rising matters more for bitcoin than how high they go.
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Bitcoin could benefit if yields rise because of
Bitcoin could benefit if yields rise because of fiscal fears, as investors may seek alternatives to government debt, but it could suffer if renewed Federal Reserve tightening drives the increase.
Some analysts expect the 10-year Treasury yield to
Some analysts expect the 10-year Treasury yield to reach 6%, driven largely by concerns about federal deficits, debt growth and competition for capital.
Since the end of 2023, the 10-year yield
Since the end of 2023, the 10-year yield has risen to 5.23% while bitcoin has roughly doubled to $86,000, suggesting that higher yields alone do not determine the cryptocurrency’s performance.
The 10-year Treasury yield, which affects borrowing costs
The 10-year Treasury yield, which affects borrowing costs across the U.S. economy, has been rising for months, and some analysts now think it's headed to 6%, a level last seen in 2000. That might sound like bad news for bitcoin BTC$84,117.13. Not necessarily.
The effect on bitcoin and on assets like
The effect on bitcoin and on assets like gold, which have no cash flow or built-in yield, depends on what is driving yields higher.
If investors want higher yields because they're worried
If investors want higher yields because they're worried about record deficits, rather than a booming economy or Fed rate hikes, that's a vote of no confidence in U.S. government finances. That's the bull case for alternatives like bitcoin, which over the long term has been largely uncorrelated with yields, a recent CoinDesk analysis showed.
"When yields rise because the Fed is tightening
"When yields rise because the Fed is tightening, bitcoin suffers. When yields rise on fiscal and term-premium concerns, the picture flips," Markus Thielen, founder of 10x Research, said in a note to clients Tuesday, forecasting a rise in the 10-year yield to 6% in the coming months.
Market action since 2022 backs Thielen's take. The
Market action since 2022 backs Thielen's take. The 10-year yield more than doubled to 3.88% that year as the Fed raised interest rates rapidly, including several 50- and 75-basis-point hikes to fight inflation. Bitcoin fell 64% that year. Fed tightening and rising yields added to the pain from crypto scams and blowups.
The picture has been different since. From the
The picture has been different since. From the end of 2023, the 10-year yield has risen 135 basis points to 5.23%, the highest since 2007. Over the same stretch, bitcoin has roughly doubled to $86,000, even after pulling back from its October record above $126,000.
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Analysts see 10-year Treasury yield hitting 6%. Bitcoin bulls shouldn't panic
Why yields are rising matters more for bitcoin than how high they go.
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Source: CoinDesk