US 10-Year Treasury Yield Could Reach 6%; Fiscal-Driven Rise May Not Hurt Bitcoin

The yield on the US 10-year Treasury could climb as high as 6%, and that may not necessarily be negative for Bitcoin if the rise is driven by concerns over America’s fiscal outlook.

CoinDesk reported on September 29 that Markus Thielen, founder of 10x Research, expects the 10-year Treasury yield to reach 6% in the coming months.

If yields rise because of Federal Reserve tightening, that would weigh on Bitcoin, Thielen said. But if the increase stems from concerns about the US fiscal deficit and debt, demand for alternative assets such as Bitcoin could grow.

That dynamic has played out before. In 2022, the US 10-year yield surged to 3.88% as the Fed aggressively raised interest rates, and Bitcoin fell 64% that year. Since late 2023, by contrast, the 10-year yield has risen 135 basis points to 5.23%, while Bitcoin has roughly doubled over the same period.

Recent gains in Treasury yields have been driven more by the US fiscal deficit, increased Treasury supply and a higher risk premium for holding long-term bonds than by expectations of additional Fed tightening.

Thielen said the 10-year yield may have further room to rise, citing nominal US gross domestic product growth of about 6.56% and average annual federal debt growth of about 8.5% since 2020, even as the 10-year yield remains in the 5% range.

Dan Niles, founder of Niles Investment Management, also expects the 10-year yield could rise to 6% as a widening US fiscal deficit and heavy bond issuance by artificial intelligence companies increase demand for funds in the bond market.

Still, rising Treasury yields would again pressure Bitcoin if they are caused by renewed Fed tightening.