- Analysis suggests rising U.S. Treasury yields could increase pressure on capital outflows from risk assets including Bitcoin and stocks.
- If the U.S. consumer price index (CPI) exceeds forecasts, expectations for prolonged high interest rates from the Federal Reserve (Fed) could strengthen and send yields higher.
- Because Bitcoin generates neither earnings nor cash flow, its value depends on the view that it is digital gold and a hedge against falling fiat-currency value, making forecasts of Bitcoin at $500,000 or $1 million look excessive.
Forecast Trend Report by Period
Rising U.S. Treasury yields may intensify pressure on risk assets including Bitcoin, according to CoinDesk.
CoinDesk, citing Jurrien Timmer, Fidelity Investments' director of global macro, reported on August 11 that Treasuries became a competing asset to stocks during the long rise in yields from the 1960s through the mid-1990s. In a post on X, Timmer wrote that investors who ignored the rising opportunity cost of capital paid a steep price in the 1987 Black Monday crash.
Black Monday refers to the October 19, 1987, plunge in the Dow Jones Industrial Average, which tumbled 22.6% in a single day. It remains the largest one-day decline on record.
Timmer wrote that the broad rise in Treasury yields since the Covid-19 pandemic in 2020 resembles the early stage of the multidecade uptrend in rates that began in the late 1950s. The 30-year Treasury yield is now near its highest level since 2007, and a hotter-than-expected U.S. consumer price index reading this week could reinforce expectations that the Federal Reserve will keep rates higher for longer, pushing yields up further.
