New hurdles for Bitcoin and the broader cryptocurrency market are being created by the surge in US Treasury yields to their highest level in 24 years, as investors face decisions on whether to assume higher risk or turn to instruments offering fixed returns. With Bitcoin retreating below $82,000 and losses spreading to Ethereum, XRP, and other digital assets, attention now shifts to upcoming US inflation data, which is expected to shape expectations for the trajectory of Fed interest rates.
US bonds pressure Bitcoin
The yield on the US 10-year Treasury bond crossed 5.35%, reaching levels not seen in 24 years. This development bolstered the attractiveness of government debt securities and weighed on investor sentiment for higher-risk assets. The fundamental difference is that US Treasuries offer regular interest payments, whereas Bitcoin yields no fixed income. When bond yields rise, investors have a greater incentive to allocate capital into government securities or hold liquidity rather than embrace the uncertainty accompanying cryptocurrencies. In its market analysis for the October 3–9 period, Bitunix highlights that rising yields exert additional pressure on Bitcoin and other speculative assets. At the same time, higher borrowing costs can temper the appeal of tech stocks and weigh on companies linked to the crypto market. Shares of firms with exposure to the sector moved in the same direction, with Strategy and Circle among those recording weekly losses. The next critical variable is the path of yields. A sustained decline could improve investor risk appetite and create more favorable conditions for a cryptocurrency recovery. Conversely, remaining at elevated levels may continue to act as a drag.
Losses in Bitcoin, Ethereum, and XRP
The pressure was not limited to Bitcoin, but extended across much of the digital asset market. During the week of October 3 to 9, Bitcoin fell by 3.80%, while Ethereum recorded a larger drop of 8.39%. XRP lost 7.09%, reflecting broader market weakness. The picture was even more telling across the 300 largest cryptocurrencies tracked by Bitunix. Only about 20% posted gains, with the median weekly return standing at -5.18%. Notable losses were also registered by well-known decentralized finance (DeFi) tokens. Uniswap's UNI fell by 18.37%, while PancakeSwap's CAKE lost 15.92%. However, the generalized decline did not prevent certain assets from making impressive upward moves. The Sandbox's SAND posted a 57.71% gain, despite the absence of clear indications of fundamental improvement in that specific project. Bitunix attributes the movement primarily to investor sentiment and capital flows, without identifying with certainty the drivers behind it. The development underscores the sharp divergences that can emerge among individual cryptocurrencies even when the overall market is under pressure.
October 14 could change the mood
The next major test for the market is the announcement of September US Consumer Price Index (CPI data) on October 14. Market forecasts project annual inflation at 3.6%, compared to 3.4% in August. The evolution of the index is expected to influence expectations regarding Fed monetary policy and, by extension, US Treasury yields. If inflation turns out higher than forecast, expectations that the Fed will maintain interest rates at elevated levels for longer could gain traction. Such a scenario could prompt a renewed rise in bond yields, increasing pressure on Bitcoin and other high-risk assets. Conversely, a cooler inflation reading could ease pressure on the bond market and bolster expectations for more favorable financial conditions. For investors, therefore, the key will lie not only in the data release itself, but in the reaction of US Treasury yields following its publication.
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