Bitcoin Bulls vs. Treasury Realities: Can Rate Cuts Sustain the Bull Market?

The Federal Reserve's 2025 rate-cutting trajectory has ignited a fierce debate among investors: Can the current bull market for Bitcoin persist amid a broader macroeconomic landscape of easing monetary policy and shifting Treasury dynamics? With the Fed projecting a gradual decline in the federal funds rate from 3.6% in 2025 to 3.0% by 2027, the interplay between Bitcoin's speculative fervor and Treasury yields' muted trajectory demands a closer look. This analysis explores the macroeconomic positioning of these assets, their historical correlations, and whether the Fed's easing cycle can sustain a prolonged Bitcoin rally.

The Fed's 2025 Projections: A Blueprint for Easing

The Federal Reserve's September 2025 projections paint a picture of cautious optimism. GDP growth is expected to hover at 1.6% in 2025, with inflation easing from 3.0% to 2.0% by 2028. The unemployment rate, projected to stabilize at 4.5%, suggests a labor market that remains resilient but not overheated. Crucially, the Fed has signaled a path of rate cuts, reducing the federal funds rate to 3.75%–4.00% in October 2025, with further reductions likely in December 2025 if economic data remains soft. These cuts are part of a broader effort to stimulate liquidity and counteract inflationary pressures, creating a fertile ground for risk assets.

Bitcoin's Bull Case: Liquidity, Real Yields, and Dollar Dynamics

Bitcoin's performance in 2024–2025 has been inextricably linked to the Fed's easing cycle. As the central bank injected liquidity into financial markets, Bitcoin emerged as a beneficiary of the "search for yield" narrative. Lower interest rates reduce the opportunity cost of holding non-yielding assets like Bitcoin, while a weaker U.S. dollar-often a byproduct of rate cuts-enhances its appeal as a hedge against currency devaluation.

Historical data reinforces this dynamic. During the 2020–2021 easing cycle, Bitcoin surged from $4K to $64K, driven by a combination of quantitative easing and falling real interest rates. Similarly, the 2024 rally, which saw Bitcoin bottom in 2023 and rise sharply post-ETF approvals, was underpinned by expectations of lower rates. With the Fed's 2025 cuts now priced in, the question is whether this tailwind can sustain Bitcoin's momentum.

Treasury Yields: A Contrarian Indicator?

While Bitcoin thrives on liquidity expansion, Treasury yields tell a different story. The 10-year yield has trended lower since late 2024, approaching 12-month lows by October 2025. This decline reflects reduced inflation expectations and a flight to safety amid a mild recessionary backdrop. J.P. Morgan anticipates two more rate cuts in 2025, which could further depress yields, particularly for intermediate-duration bonds.

However, the relationship between Bitcoin and Treasuries is not straightforward. Lower yields often signal weaker economic growth, which could dampen risk appetite. Yet, Bitcoin's price action suggests it is more sensitive to real yield changes (nominal rates minus inflation) than to nominal rates alone. For instance, even as yields fall, Bitcoin's rally has been driven by the expectation that real rates will turn negative, making cash holdings less attractive.

Macroeconomic Positioning: Interlinkages and Risks

The interplay between Bitcoin and Treasuries during Fed easing cycles is shaped by liquidity and investor behavior. When the Fed cuts rates, it typically boosts asset prices across the board, but the allocation between equities, crypto, and bonds depends on market sentiment. For example, in 2020, Bitcoin and equities rallied in tandem, while Treasuries saw inflows as investors sought safety. In 2025, the narrative appears to be shifting: Bitcoin is increasingly viewed as a "risk-on" asset, while Treasuries remain a "risk-off" haven.

Yet, this positioning is not without risks. BlackRock notes that lower rates may favor intermediate-duration bonds over long-dated Treasuries, as term premiums rise in response to uncertainty. For Bitcoin, the challenge lies in sustaining momentum if the Fed's easing cycle stalls or if macroeconomic data surprises to the upside (e.g., stronger-than-expected employment figures). Such scenarios could trigger a rotation out of risk assets, pressuring Bitcoin despite the Fed's dovish stance. As of November 2025, the market remains sensitive to these shifting signals.

Can the Bull Market Sustain Itself?

The sustainability of Bitcoin's bull market hinges on three factors:
1. Continuity of Easing: The Fed's commitment to rate cuts is critical. If the December 2025 meeting delivers another 25-basis-point cut, it would reinforce the narrative of prolonged liquidity.
2. Inflation and Real Yields: A sustained decline in inflation (to 2.0% by 2028) would push real yields further into negative territory, bolstering Bitcoin's appeal.
3. Market Sentiment: Bitcoin's performance is also influenced by non-Fed factors, such as regulatory developments and institutional adoption. The approval of spot Bitcoin ETFs in 2024, for instance, catalyzed a wave of institutional inflows.

However, the market remains vulnerable to shocks. A weaker-than-expected labor market could force the Fed to accelerate cuts, potentially triggering a bond rally at the expense of equities and crypto. Conversely, a stronger labor market might delay cuts, increasing the cost of holding Bitcoin.

Conclusion: A Delicate Balance

The Fed's 2025 rate cuts have created a favorable environment for Bitcoin, but the bull market's longevity depends on the Fed's ability to balance inflation control with growth support. While historical correlations suggest Bitcoin will benefit from easing cycles, the interplay with Treasury yields and broader macroeconomic conditions introduces complexity. Investors must remain vigilant to shifting signals-whether from the Fed, labor markets, or global economic trends-to navigate this delicate balance.

As the year progresses, the key question will be whether the Fed's easing can outpace inflationary headwinds and sustain the liquidity-driven rally. For now, Bitcoin bulls have reason to be cautiously optimistic, but the path forward is anything but certain.