Analyst Darkfost Says Elevated U.S. Treasury Yields Are Pressuring Bitcoin

Bitcoin is facing one of the most challenging U.S. Treasury yield backdrops in its history, crypto analyst Darkfost said in a social media post.

According to ChainCatcher, Darkfost noted that while the U.S. federal funds rate and the U.S. dollar index have been higher in past cycles, long-term U.S. Treasury yields are currently staying elevated, with both 30-year and 10-year yields fluctuating in the 4.5% to 5% range.

The analyst added that rising expectations of another rate hike within the year are keeping funding costs high and tightening liquidity conditions.

Darkfost argued that in a high-yield environment, investors tend to favor lower-risk fixed-income assets, which can reduce the appeal of risk assets such as Bitcoin. The post also cited historical patterns suggesting that rising Treasury yields often coincide with tighter financial conditions and can weigh on Bitcoin’s price performance.

The analyst said markets may be at a turning point, with the risk premium offered by risk assets relative to long-term Treasuries being compressed. However, Darkfost added that if the macroeconomic outlook becomes clearer and investors rebuild confidence in the bond market, inflows into bonds could help push yields lower, potentially widening risk premia again and improving conditions for Bitcoin and other risk assets.

Darkfost said this adjustment process could take months and would largely depend on the direction of U.S. government policy and broader economic developments.