Bitcoin (BTC) has experienced a 2.06% decline in value today, falling short of the $87,000 resistance level and settling at $84,425 at the time of reporting. This drop is attributed not only to rising rumors surrounding escalating tensions in the Middle East but also to a temporary effect from the recent surge in U.S. government bond yields.
Bitcoin Declines Amid Rising U.S. Bond Yields
The yield on 10-year U.S. Treasury bonds has climbed to 5.11%, a level unseen since the global financial crisis in 2007.
Source: TradingView
Beyond inflation concerns driven by geopolitical issues, this increase in yields is also a reaction to the recent interest rate hike by the U.S. Federal Reserve. Comments from Fed Governor Michael Barr have further sparked speculation about potential additional hikes.
Compounding this issue is the national debt in the U.S., which has surpassed the $40 trillion mark. The government is now compelled to issue more Treasury bonds to address budget deficits. Concurrently, artificial intelligence (AI) organizations are also heavily borrowing to finance infrastructure expansion. This surge in debt issuance has intensified competition for investors’ funds, thereby pushing yields higher.
Moreover, this rise in yields has led to a narrowing differential between the U.S. and international bond yields, prompting foreign investors to move their capital back to domestic markets. For example, China has decreased its holdings of U.S. Treasuries by 11% this year.
Current and Expected Reactions of BTC
Historically, an increase in U.S. bond yields triggers a two-phase response from Bitcoin.
Initially, investors adopt a defensive stance, selling off crypto assets for the more reliable returns offered by Treasuries. This shift is what led to Bitcoin’s recent decline and also contributed to the crypto winter of 2022, which saw BTC plummet to $16,000.
The subsequent phase, occurring over 3 to 12 months, involves a recovery period where Bitcoin tends to regain value. The recent interest rate hike in mid-September caused Bitcoin to drop towards $75,000, only to bounce back to around $81,000 within a matter of days.
Additionally, as a safeguard against currency devaluation, investors increasingly pivot their funds towards Bitcoin and gold. This trend is reflected in the Bitcoin-gold correlation, which has reached its highest level since 2020 (+0.50).
Recently, Bitcoin has found some support from spot ETF inflows, with Monday recording the largest single inflow ($999 million) since October 2025. The current resistance level stands at $87,000, while support is expected at $83,520; a drop below this level may lead to a decline to around $81,000.
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