Crypto Markets Tumble as US Treasury Yields Surpass 4.5%
2min read The recent surge in US Treasury yields has sparked significant volatility in the crypto markets, as investors reassess their risk appetites in response to the changing macroeconomic landscape. The 10-year Treasury yield has surpassed 4.5%, signaling a shift towards risk-off sentiment. This development has led to a noticeable pullback in risk assets, including cryptocurrencies, as higher yields make fixed-income assets more attractive compared to volatile markets.
Bitcoin and Ethereum, two of the largest cryptocurrencies by market capitalization, have both experienced declines in response to the yield surge. This correlation between rising yields and declining crypto prices underscores the interconnectedness of traditional and digital asset markets, especially during periods of macroeconomic uncertainty. The heightened selling pressure in the crypto markets is evident in the increased trading volumes.
The surge in US Treasury yields presents both risks and opportunities for crypto investors. Higher yields often lead to reduced liquidity in riskier assets as institutional investors reallocate capital to safer havens. This could signal a short-term bearish trend, with potential entry points for Bitcoin near the $65,000 support level and Ethereum around $3,400, provided these levels hold. Conversely, altcoins with exposure to DeFi and yield farming, such as Aave, saw a sharper decline, reflecting sensitivity to interest rate changes. Cross-market analysis suggests that if yields continue to climb, crypto markets could face further downward pressure, particularly for leveraged positions. However, a reversal in yields or dovish Fed commentary could spark a relief rally, making it critical for traders to monitor upcoming economic data releases for clues on inflation trends.
Technical indicators also provide insights into the current market conditions. Bitcoin’s Relative Strength Index (RSI) dropped to 42 on the daily chart, signaling oversold conditions and a potential bounce if buying interest returns. Ethereum’s RSI mirrored this at 40, while its moving average convergence divergence (MACD) showed bearish momentum with a negative histogram. On-chain data revealed a 12% increase in Bitcoin outflows from exchanges, suggesting some investors are moving to cold storage amid uncertainty. The 30-day rolling correlation between Bitcoin and the S&P 500 stood at 0.65, indicating a strong linkage between stock and crypto movements during this yield-driven sell-off.
The interplay between rising US Treasury yields and crypto markets emphasizes the importance of monitoring macroeconomic indicators for trading decisions. As yields impact risk appetite, institutional money flow between stocks and crypto remains a key factor. Spot trading volumes for Bitcoin and Ethereum pairs on major exchanges declined by 10% compared to the previous day, signaling reduced retail participation amid uncertainty. For traders, focusing on key support levels, volume trends, and cross-market correlations will be crucial in navigating this volatile period. The potential for further yield increases could exacerbate selling pressure, but any stabilization in bond markets might offer short-term buying opportunities in oversold crypto assets.
