Cryptocurrency Prices Under Pressure Amid Rising Treasury Yields
On Friday, cryptocurrency prices faced renewed pressure as U.S. Treasury yields became a focal point for traders, overshadowing crude oil concerns. Bitcoin dipped below $69,000 after a brief rally earlier in the week, with ether also declining. Hopes for a quick resolution to the conflict in Iran dwindled, coinciding with the U.S. 10-year Treasury yield hovering at around 4.42%.
This sentiment was echoed in a widely discussed letter by Adam Kobisi, which emphasized a significant shift in market dynamics. According to Kobisi, the main issue for the U.S. economy isn’t the surge in oil prices, but the instability in the bond market. “The bond market is by far the biggest problem for the US right now, much bigger than the energy price situation,” he stated.
Kobisi further pointed out that while recent weeks have seen attention on oil, war news, and escalating geopolitical tensions, larger forces have quietly begun to dominate. The bond market is taking charge, affecting stocks, commodities, and policy decisions.
This week’s market fluctuations support this theory. On Thursday, President Trump declared a 10-day pause on attacks against Iranian energy targets, saying negotiations were progressing positively. Initially, yields fell in response, but this trend didn’t last.
By the end of trading hours, the 10-year Treasury yield had risen to 4.415%, its peak since July, while mortgage rates also hit their highest levels since October. Fed Governor Lisa Cook mentioned that the ongoing war has shifted the risk balance toward inflation. The futures market now reflects almost no expectation of the Fed lowering rates by 2026.
The data illustrates mounting tension. The MOVE index, which gauges U.S. Treasury bond volatility, surged 17.86% on the day to reach 115.02. Kobisi also referenced the FedWatch distribution, interpreting it as suggesting that interest rates will remain largely stable until September 2027—a sharp change from late 2025, when discussions centered around potential rate cuts in 2026.
Interestingly, the current conversation around interest rates has shifted dramatically in just a few weeks. As the conflict in Iran has progressed, discussions are now leaning towards potential hikes in interest rates, with a 48% chance that rates could increase by January 2027.
The labor market has been cited as deteriorating, even before this latest inflation surge, marked by significant downward revisions in payroll data and notable weeks of unemployment. For cryptocurrencies, this landscape highlights their status as a liquidity-sensitive asset class. On March 23, when President Trump first announced a delay in military action, Bitcoin jumped over 5% to $71,794, and altcoins followed suit. However, that relief seems to have faded, as by Friday, Bitcoin was at $68,639 and Ethereum at $2,061.81, both having declined as market focus shifted to yields and tight financial conditions.
Arthur Hayes, a BitMEX co-founder, succinctly captured the cryptocurrency angle when he questioned how the U.S. Treasury Secretary would respond if military action escalates. It’s not just that a war could disrupt markets; a notable drop in U.S. debt could prompt the government to intervene. In Hayes’ view, a reduction in geopolitical tensions alone won’t lead to a significant rebound in crypto assets—it would require severe bond market stress that could induce liquidity restoration from officials.
Kobisi’s analysis aligns with this perspective. The argument is that if the 10-year Treasury yield climbs toward the 4.50% to 4.70% range, the probability of a policy response will sharply increase, given the White House’s sensitivity to bond market stress.
This means that the cryptocurrency sector will be closely watching the same indicators as macro traders: Treasury yields, interest rate predictions, and any progress in de-escalation discussions. A decline in bond volatility could see cryptocurrencies react similarly to their earlier surge this week with any slight improvement in conflict news.
However, if yields keep rising, the market may continue viewing Bitcoin and other cryptocurrencies merely as a reflection of global interest rate trends, rather than as a hedge against geopolitical uncertainty.
As of now, the total market capitalization of cryptocurrencies stands at $100.
