$BTC ๐จ THIS IS WORRISOME FOR THE CRYPTO MARKET ๐จ
The US 10-year and 30-year bond yields have broken out of their 6-month downtrend.
And this is one of the clearest signals that crypto could face short-term downward pressure.
Today, the US 10-year and 30-year yields broke above their 6-month downtrend.
When yields rise, โsafeโ returns become more attractive, and capital leaves risk assets.
That means less money flowing into crypto, stocks, and high-risk assets.
Higher yields hurt crypto and stocks because:
โข Investors shift into government bonds
โข Liquidity gets tighter
โข Borrowing becomes harder
โข Risk-taking drops across markets
And there's one more reason the rising yields are a bad sign.
The Fed is expected to cut rates again this week.
Bond yields rising means the market is expecting a hawkish cut.
In simple terms, the market thinks that the Fed can't continue rate cuts as inflation is not fully under control.
But if Fed paused rate cuts similar to Q4 2024, things will get worse.
This is because labor market is already weak, bankruptcies are rising and small banks are facing liquidity crisis.
So, if bond yields continue to go up, Fed only has one way to control it.
"Buying bond, aka QE."
When Fed buys bonds, bond prices go up and yields go down.
We saw this happening in 2020-21, which led to the biggest rally ever.
A few banks are also expecting that the Fed will start $45 billion/month in T-bills buying from early 2026.
If this isn't enough to control the yields, the Fed will definitely accelerate its bond buying.
Short-term: Crypto market could experience downside volatility
Mid-term and Long-term: BTC and alts will be the fastest horse once Fed returns to QE.
