Bitcoin has so far avoided a sharp sell-off as long-term US Treasury yields climb rapidly, although higher borrowing costs are increasing pressure on risk assets. The 10-year Treasury yield rose to 5.22%, putting financing costs at their highest level since 2007. The 30-year yield briefly reached 5.5185%, its highest level in 22 years, before trading near 5.511%. Bitcoin remained mostly between $83,000 and $85,000, last trading at about $83,679, down 0.70% over 24 hours.
The repricing in the bond market is raising the cost of holding bitcoin and other risk assets. US government bonds now offer nominal yields above 5%, while higher risk-free rates are pushing up financing costs across the broader financial system. Even after briefly approaching $87,000 on Monday, bitcoin has retained most of its recent gains. So far, the adjustment has been more visible in derivatives positioning than in spot prices.
Bitcoin Outpaces Rising Real Yields—for Now
Bitwise analyst Camran Khosravi said bitcoin gained about 22% between August 19 and September 24, while the 10-year Treasury’s real yield rose by roughly 50 basis points over the same period. Real yields continued to move higher during that period, but bitcoin completed most of its advance early and then held at relatively elevated levels.
That divergence has raised a key market question: can bitcoin remain resilient as US government bonds offer comparatively lower risk while yields continue to rise? Jefferies said the 10-year Treasury yield could rise for a seventh consecutive month, matching the longest run of monthly increases in data going back to 1970.
Demand also appeared weaker at this week’s seven-year Treasury auction. James Lavish, co-managing partner of Bitcoin Opportunity Fund, said the US Treasury sold $44 billion of seven-year notes at a final yield of 5.085%, well above the 4.512% recorded at the August auction. It was also the highest auction yield for the maturity since April 1993. The notes priced 0.7 basis points above the prevailing market yield at the auction, while the bid-to-cover ratio fell to 2.42 from 2.50.
The Treasury stopped issuing seven-year notes in 1993 and resumed the maturity in 2009. The latest auction yield therefore stands near the upper end of the range since issuance restarted, indicating that investors are demanding more compensation to absorb longer-dated government debt.
Borrowing and Economic Data Keep Yields Under Pressure
Allianz chief economic adviser Mohamed El-Erian said the forces behind the bond sell-off had been building for some time. They include elevated government and corporate borrowing, resilient economic activity, and reduced willingness or capacity among some traditional buyers of US Treasuries. He also said investors may still be influenced by the ultra-low-yield environment that followed the 2008 financial crisis and may not be fully prepared for borrowing costs to remain high for an extended period.
Recent economic data has reinforced that view. The Federal Reserve raised its target rate range by 25 basis points last week, while business activity, the labor market and energy costs remained relatively firm. Concerns that monetary policy could stay restrictive have therefore not disappeared.
S&P Global’s preliminary composite purchasing managers’ index rose to 58.4 in September from 56.0, its highest level since July 2021. The pace of new hiring by businesses accelerated to its fastest in more than four years, while input costs climbed to near a four-year high. If growth continues to exceed expectations, inflationary pressure could remain elevated, leaving policy rates and financial conditions restrictive for longer.
The risk-reward profile of Treasuries also changes once yields move above 5%. Jurrien Timmer, director of global macro at Fidelity, said a 5% yield on the 10-year Treasury provides bond investors with a larger income buffer. His calculations suggest that a 100-basis-point decline in yields could produce a bond return of 11.9%, while a rise to 6% would result in a loss of about 1.9%.
That backdrop increases bitcoin’s opportunity cost because the cryptocurrency pays neither interest nor dividends, while US government bonds now offer nominal yields above 5%. Timmer still includes bitcoin among the core assets in his current multi-asset framework, alongside commodities. Longer-duration bonds, by contrast, have lagged.
$1.7 Billion in Leverage Exits as Spot Losses Stay Limited
Bitcoin’s first response to the macro shock has been a reduction in leverage. Data showed that leveraged exposure across relevant exchanges fell by about $1.7 billion, or 14.3%. Over the same period, bitcoin slipped from around $86,000 to roughly $84,000, a decline of about 2.3%.
By exchange, leveraged exposure fell by approximately $710 million on Gate.io and $680 million on Binance. Open interest also declined on HTX and Bybit. Open-interest data cannot determine whether longs or shorts accounted for most of the reduction, since the closure of either side can remove contracts from the market. However, leverage fell substantially more than the spot price, indicating that traders were actively reducing positions without triggering a comparable breakdown in the cash market.
Deleveraging can reduce the fuel available for cascading liquidations, but sizeable leveraged positions remain near current prices. CoinGlass’s liquidation heat map for the past 24 hours showed a concentration around $85,300 to $85,700 above the market. Liquidity was also clustered near $83,000 below, with a larger liquidation concentration around $80,000.
BlockScholes said the rise in long-term Treasury yields had not yet produced a matching increase in crypto-market volatility. Bitcoin remained within its recent range, while 30-day implied volatility stayed near the lower end of its recent band.
Treasury Yields and Inflation Data Set the Next Test
The Treasury market remains a central gauge of whether bitcoin can maintain its recent resilience. A further move above 5.2% in the 10-year yield, or above 5.52% in the 30-year yield, could place more direct pressure on bitcoin’s current support range. A retreat in long-term yields would ease both the opportunity cost of holding the asset and broader financing pressure.
The next major data point is the personal consumption expenditures price index, due on September 30, followed by the September employment report on October 2. If inflation or labor-market data continue to point to an overheated economy, bond traders may push long-term yields higher. The market will then focus on whether bitcoin can hold its spot range after leverage has been reduced by a double-digit percentage.