Bitcoin's Resilience Against Rising Bond Yields

Despite rising global bond yields, Bitcoin shows no significant correlation, indicating its resilience. However, short-term volatility may still affect its performance.

Markets Bitcoin's Resilience Amidst Rising Bond Yields

BTC shows little reaction to increasing bond yields over the long term, though short-term volatility may impact crypto sentiment.

By Omkar Godbole| Edited by Jamie Crawley 12 minutes ago 4 min read

As bond yields surge globally, conventional wisdom suggests this trend is negative for Bitcoin BTC$83,219.41. However, historical data indicates that Bitcoin has not consistently correlated with bond yields.

Recently, the U.S. 10-year Treasury yield rose by 15 basis points, reaching its highest value since 2007 at over 5.13%, influencing yields worldwide.

The prevailing view is that as yields rise, the opportunity cost for holding non-yielding assets such as Bitcoin and gold increases, potentially leading investors to favor bonds. This scenario would pose a challenge for cryptocurrencies.

However, actual correlation data does not support this theory. According to CoinDesk's analysis, the 90-day correlation between Bitcoin's daily returns and the U.S. 10-year yield is a mere −0.18, effectively indicating no significant relationship.

Longer-term correlations are similarly low, with figures of −0.06 over 180 days and −0.03 over a year, showing Bitcoin's lack of correlation with yields from other countries as well.

This lack of correlation may actually prove beneficial, allowing Bitcoin to function as a diversifying investment that enhances a portfolio's risk-adjusted returns. Lacie Zhang, research lead at Bitget Wallet, stated, “Bitcoin’s near-zero correlation with U.S. Treasury yields is a genuine portfolio advantage because it suggests BTC is not simply trading as a duration or rates asset.”

Bitcoin's overall performance supports this perspective. Since 2021, it has surged by 191%, reaching an all-time high of $126,000 last October, despite significant increases in 10-year yields across various countries, including over 500 basis points in the U.K. and France, and more than 400 in the U.S., Australia, Germany, and Italy during the same timeframe.

In contrast, Japan and Switzerland experienced yield increases of 296 and 105 basis points, respectively, while China faced declining yields due to ongoing deflation.

Attention to Bond Market Volatility

While Bitcoin's general lack of correlation may protect it from long-term declines, it does not shield the cryptocurrency from short-term volatility, particularly when driven by bond market fluctuations rather than yield levels.

Recent spikes in bond market turbulence, especially in Treasuries, can tighten financial conditions, increase borrowing costs, and induce a broader risk aversion. The MOVE Index, which tracks expected volatility in Treasury notes, rose by 21% to 95 points on Wednesday, its highest level since April 1. This volatility was reflected in Bitcoin's drop from $87,200 to $83,500, suggesting that the market may have been searching for a reason to retreat after its recent gains.

If Treasury volatility continues or escalates further, Bitcoin could face additional corrections.

Yields Increase

The rise in yields on Wednesday was primarily driven by U.S. economic data rather than fiscal concerns.

S&P Global's preliminary U.S. Composite PMI for September reached 58.4, the highest since July 2021, up from 56.0 in August, indicating robust business activity and a surge in inflationary pressures.

This data reinforced expectations that the Federal Reserve may need to continue raising rates following a 25 basis point increase in September, leading to higher yields for both the 10-year and two-year notes.

Interestingly, even though U.S. data prompted the move, France's yields rose more than the U.S. yields on the same day. The U.K. also saw yields increase nearly as much as those in the U.S. Robin Brooks, Senior Fellow at the Brookings Institution, noted that this pattern was also observed in Italy and Greece.

“What happened today is that we got strong data for the U.S., and then fiscally vulnerable countries reacted negatively,” Brooks explained in a Substack post.

This trend is not new; markets have been penalizing countries with high fiscal debt for some time. Japan, for example, had a debt-to-GDP ratio exceeding 200% by the end of 2025, with the U.S. at 123.8%. France and the U.K. followed with ratios of 115% and 102%, respectively, while China stood at 100%.

In contrast, Switzerland maintained a federal debt of just 16% of its GDP, positioning the Swiss franc as a safe haven due to its relatively stable bond yields. Some analysts suggest that the Swiss franc is becoming a preferred carry currency, replacing the Japanese yen.

For Bitcoin, the situation is clear. The factors causing unease in the bond markets—fiscal credibility, growth, and inflation in cities like Paris, London, and New York—are reflected in yields and fiat currencies but have not significantly impacted Bitcoin's price movements over the years.