Flatter US Yield Curve, Hawkish Fed Signal Could Weigh on Bitcoin Rally

US Treasury yields underpin valuations across global markets, and a higher risk-free rate typically raises financing costs while reducing demand for speculative assets. Bitcoin is particularly exposed because it generates no interest, making cash and government debt relatively more attractive when expectations for Federal Reserve tightening increase. The shift can pressure both crypto valuations and the institutional flows that have supported the market.

The US 10-year Treasury yield climbed above 4.75% as rising oil prices and hawkish remarks from the Federal Reserve chair reinforced inflation and tightening concerns. Markets put the probability of a September rate increase at 65.4%, while Barclays and Société Générale revised their forecasts to expect two more hikes this year. Bitcoin spot ETFs also ended a nine-day streak of net inflows, signaling that higher yields are beginning to weaken the cryptocurrency’s funding momentum.

Bitcoin remains highly sensitive to Federal Reserve policy because interest rates shape dollar liquidity and investors’ appetite for risk. Rising U.S. Treasury yields increase the return available on comparatively safer assets and raise the opportunity cost of holding non-yielding bitcoin. The cryptocurrency’s ability to remain stable during a bond-market selloff therefore offers a useful gauge of whether traders are reducing exposure or looking beyond immediate macroeconomic pressure.

On July 29, the Federal Open Market Committee kept the federal funds target range unchanged at 3.50% to 3.75%. After the decision, the 10-year Treasury yield climbed 5.5 basis points to 4.66%, while the two-year yield fell 6 basis points to 4.22%, steepening the curve. Bitcoin surrendered an initial move higher but remained just below $64,000, up about 0.45% over 24 hours, as traders assessed the Fed’s stance and inflation outlook.

The 30-year US Treasury yield is a key benchmark for long-term borrowing and global asset valuations, influencing mortgages, corporate financing and investors’ required returns. Its rise toward levels last seen before the global financial crisis increases the appeal of risk-free government debt and raises the opportunity cost of holding non-yielding assets such as Bitcoin, tightening financial conditions and weighing on risk appetite.

The 30-year yield climbed above 5.2%, its highest level since 2007 and a near 19-year peak. Pressure intensified after three Federal Reserve officials made an unusually coordinated case for higher interest rates, reinforcing expectations that policy could remain restrictive or tighten further. The combination of a Treasury selloff and hawkish Fed signals pushed Bitcoin below the $80,000 threshold as investors cut exposure to risk assets.