YEREVAN (CoinChapter.com) — The US 10-year Treasury yield dropped below 4%, marking the first time since October 2024. This decline came during growing concerns over economic uncertainty, rising recession fears, and expectations that the Federal Reserve might cut interest rates sooner.
The financial platform Barchart posted data showing the drop, which led to reduced demand for government bonds. Lower Treasury yields typically signal reduced returns on safer investments. This pushes some investors toward riskier assets like Bitcoin.
The 2-year Treasury yield also dropped sharply after new tariff announcements. The decrease suggests that the bond market expects an interest rate cut or a shift in monetary policy.
Bitcoin Gains Attention Amid Falling Treasury Yields
Lower Treasury yields usually make bonds less attractive. As bond returns fall, some investors move capital into other assets. Bitcoin has historically attracted attention during similar times.
Crypto analyst Dan Gambardello said that falling yields reduce the incentive to keep money in government bonds. He added,
“There’s less reason to sit in ‘safe’ bonds—and ultimately more reason to chase returns in risk assets like BTC and alts.”
This view reflects past market behavior. When real yields go down, investors often increase exposure to Bitcoin and other digital assets due to increased liquidity and potential returns.
Arthur Hayes Connects Yields to Tariffs and Fed Moves
Former BitMEX CEO Arthur Hayes commented on the situation. He pointed out that the 2-year Treasury yield fell sharply following the recent Trump tariffs. He said the drop shows the market expects rate cuts from the Federal Reserve.
Hayes wrote on X,
“The 2yr treasury yield dumped after Tariff announcement because the market is telling us the Fed will be cutting soon and possibly restarting QE to counter -ve economic impact.”
His statement connects the tariff decision with possible quantitative easing (QE). This policy involves the central bank adding money into the economy, which can increase liquidity in markets like crypto.
Trump Tariffs Fuel Market Volatility
The yield decline followed new tariffs introduced under Donald Trump’s economic strategy. These tariffs raised concerns about slowing global trade. Investors moved funds into US bonds, which pushed bond prices up and yields down. During his first term, Trump often called for a weaker dollar and lower interest rates. He also pushed the Federal Reserve to cut interest rates. These actions aimed to support US exports and economic growth.
Kristoffer Kepin, a market analyst, noted that the M2 money supply is rising. That increase in available money could lead to more liquidity entering the markets, including Bitcoin and other digital assets.
Major financial firms still favor traditional safe havens over Bitcoin. Goldman Sachs recommended the Japanese yen and gold as more reliable options during economic uncertainty.
Kamakshya Trivedi, the bank’s head of global markets strategy, said to Bloomberg,
“The yen offers investors the best currency hedge should the chances of a US recession increase.”
Notably, Bank of America’s survey showed that 58% of fund managers favored gold in trade conflict scenarios. Only 3% preferred Bitcoin, indicating continued caution around digital assets during global market stress.
