US Treasury Bonds Break 5%, 'Emergency'...Simultaneously Pressuring Bitcoin (BTC) and Stocks

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As the US 10-year Treasury yield surpassed 5%, reaching its highest level in three years, a variable emerged that could simultaneously put pressure on Bitcoin (BTC) and the stock market.

According to the cryptocurrency specialized media BeInCrypto on September 15 (local time), the US 10-year Treasury yield broke 5% on Monday, its highest level in three years. Yields continued to rise even as the Trump administration tried to calm the bond market. Rising Treasury yields can increase borrowing costs across the economy and suppress the investment appeal of risk assets like stocks and Bitcoin.

In the stock market, the burden on corporate valuations first came to the forefront. If investors can expect a relatively safe 5% return from Treasury bonds, their incentive to take on stock market risk may decrease. Antony Ghee, Head of Equity Investments at the Chief Investment Office of Merrill and Bank of America Private Bank, described the situation of the 10-year yield consistently rising above 5% as “the biggest short-term concern for equities.” Higher corporate financing costs can also put pressure on earnings that support stock prices.

BeInCrypto cited large-scale government borrowing and debt related to artificial intelligence (AI) infrastructure as factors contributing to the upward pressure on Treasury yields this year. As bond yields rise, the burden on stocks, which must compete with risk-free assets, also increases. In particular, stocks whose corporate value heavily reflects expectations for future earnings may be affected by a high-interest rate environment.

Bitcoin also faces a new competitor in the form of 5% Treasury yields. Since Bitcoin does not pay interest itself, if US Treasury bonds, classified as safe-haven assets, offer high returns, the opportunity cost of holding Bitcoin increases. BeInCrypto analyzed that rising interest rates could be a direct pressure factor for Bitcoin, as risk assets must offer higher expected returns than Treasury bonds to attract investors.

Market attention is shifting to the Federal Reserve's (Fed) monetary policy decisions. BeInCrypto reported that a rate freeze or dovish signals could lower Treasury yields, easing the pressure on stocks and Bitcoin. Conversely, if a benchmark rate hike is accompanied by hawkish signals, the pressure on risk assets could continue, it analyzed.

[Article Summary]

-The US 10-year Treasury yield surpassed 5%, reaching its highest level in three years.

-Experts assessed that if the 10-year yield continues to rise above 5%, it could pose the biggest short-term risk to the stock market.

-A 5% Treasury yield can increase the opportunity cost of Bitcoin, which does not pay interest, thereby suppressing its investment appeal.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*