10-Year Treasury Yield Drops Below 4%, Boosting Bitcoin Prospects

The US 10-year Treasury yield has fallen below 4% for the first time since October, signaling a potential shift in Federal Reserve (Fed) policy. This decline reflects growing economic uncertainty, with rising recession fears and increasing speculation that the Fed may pivot to rate cuts sooner than expected.

As Treasury yields fall, the attractiveness of traditional safe-haven assets like bonds diminishes, encouraging investors to seek higher returns elsewhere. Historically, Bitcoin and altcoins have benefited from such shifts, as declining real yields increase liquidity and risk appetite. Crypto analyst Dan Gambardello emphasized this connection, noting that lower yields are bullish for Bitcoin, aligning with expectations that a dovish Fed will drive liquidity into riskier assets.

“The irony is that when yields fall, there’s less reason to sit in “safe” bonds— And ultimately more reason to chase returns in risk assets like BTC and alts. This is why you see risk-on bulls get excited when 10-year yields begin falling,” Gambardello stated.

Additionally, BitMEX founder and former CEO Arthur Hayes pointed out that the 2-year Treasury yield sharply declined after the new tariffs were introduced. He said this reinforced the market’s expectation of imminent Fed rate cuts. “We need Fed easing, 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,” Hayes shared.

Hayes previously projected that Bitcoin could surge as high as $250,000 if quantitative easing (QE) returns in response to economic downturns. Further, analysts have tied the yield drop to economic uncertainty triggered by tariff strategy. These tariffs have spurred a flight to safety, pushing bond prices higher and lowering yields. This trend aligns with the broader economic approach of weakening the dollar and lowering interest rates, which historically benefit Bitcoin.

Another analyst, Kristoffer Kepin, highlighted that the M2 money supply is growing. This reinforces expectations of increased liquidity entering the market further. This influx of capital could flow into Bitcoin and altcoins as investors seek alternative stores of value amid economic turbulence.

Despite Bitcoin’s potential upside, some analysts have recommended gold and the Japanese yen as preferred hedges against recession risks. Specifically, the bank cited its historical performance in risk-off environments. The bank expressed the same sentiment toward gold, raising its forecast as investors buy the yellow metal. Similarly, a survey showed that a majority of fund managers prefer gold as a trade war haven, while only a small percentage back Bitcoin.

As Treasury yields continue to fall and economic uncertainty mounts, the Fed becomes a key watch for investors for signs of a policy shift. If rate cuts and liquidity injections materialize, Bitcoin could see substantial gains, particularly as traditional assets undergo re-pricing. However, experts caution that short-term volatility remains a key risk factor amidst these market shifts.