Bitcoin’s recent decline has been closely examined in relation to rising U.S. Treasury yields, with several factors linking these two financial phenomena. The core connection lies in how changes in Treasury yields influence investor behavior, risk appetite, and the relative attractiveness of different asset classes, including cryptocurrencies like Bitcoin.
U.S. Treasury yields represent the return investors receive from government bonds, which are considered among the safest investments. When Treasury yields rise, these bonds offer higher, more predictable returns, making them more appealing to investors seeking safety and steady income. This shift can draw capital away from riskier assets such as Bitcoin, which does not generate cash flow or yield and is often viewed as a speculative investment. As a result, rising Treasury yields can reduce demand for Bitcoin, contributing to its price decline.
In 2025, the 10-year U.S. Treasury yield experienced fluctuations, reaching highs earlier in the year before trending lower toward the end of the year. Analysts noted that the six-month high in the 10-year Treasury yield diminished the appeal of crypto assets, as investors shifted toward safer and more predictable returns offered by government bonds. This dynamic was part of a broader market correction in Bitcoin, which some experts described as healthy and typical after significant price run-ups. If Bitcoin prices remain above key psychological levels, such as $85,000 or $110,000, momentum could build again, but failure to hold these levels might accelerate selling pressure[1].
The Federal Reserve’s monetary policy plays a crucial role in this relationship. When the Fed raises interest rates to combat inflation, bond yields typically rise, increasing the opportunity cost of holding non-yielding assets like Bitcoin. Higher interest rates generally lead to tighter liquidity conditions, reducing the amount of money available for speculative investments. This environment tends to suppress demand for cryptocurrencies, which are often treated as high-risk assets. Conversely, when the Fed signals rate cuts or maintains lower rates, liquidity improves, and risk appetite can increase, potentially benefiting Bitcoin and other digital assets[3][6].
Bitcoin’s unique characteristics also influence how it responds to changes in Treasury yields. Unlike gold, which is a traditional safe haven and non-yielding asset, Bitcoin is often seen as a hybrid asset—part speculative investment, part digital store of value. Its price movements are influenced not only by yield competition but also by broader market sentiment, liquidity conditions, and investor risk tolerance. For example, during periods of policy uncertainty or geopolitical risk, Bitcoin may behave differently compared to traditional assets, sometimes decoupling from stock market trends or Treasury yields[3][5].
Another factor is the correlation between Bitcoin and other financial markets. In 2025, Bitcoin’s correlation with the Nasdaq stock index weakened, indicating that Bitcoin’s price dynamics were not always moving in tandem with traditional equities. This decoupling suggests that while rising Treasury yields and Fed policies impact Bitcoin, other forces such as market-specific events, investor psychology, and crypto-specific developments also play significant roles[5].
Tax strategies and investor behavior further complicate the picture. Some investors engage in tax-loss harvesting by selling depreciated assets like Bitcoin to offset capital gains elsewhere, which can increase selling pressure during periods of price decline. Others may lock in gains after a strong rally, contributing to volatility. These behaviors can amplify Bitcoin’s price movements independently of Treasury yield changes but often coincide with broader market trends influenced by interest rates[1].
In summary, Bitcoin’s decline is linked to rising U.S. Treasury yields primarily through the mechanism of shifting investor preferences toward safer, yield-bearing assets amid tighter monetary conditions. The Federal Reserve’s interest rate policies, inflation expectations, and liquidity dynamics all feed into this relationship. However, Bitcoin’s price is also shaped by its unique market characteristics, investor sentiment, and external factors, making the connection complex and multifaceted rather than a simple cause-and-effect scenario.