Bitcoin Keeps Falling When Bond Yields Jump. The Longer-Term Data Say It Shouldn’t.

Bitcoin fell from roughly $87,200 to $83,500 as Treasury yields surged this week, reviving a familiar explanation for crypto weakness: when investors can earn more than 5% from government bonds, a volatile asset that pays no income becomes harder to own. The problem is that Bitcoin’s history provides remarkably little evidence that rising yields actually determine where it goes over time.

The latest selloff certainly looked like the textbook version of that trade. The 10-year Treasury yield jumped 15 basis points Wednesday to more than 5.1%, its highest level since 2007, as unexpectedly strong economic data reinforced expectations that the Federal Reserve could keep monetary policy tighter for longer. Bitcoin and stocks fell as investors repriced risk. Fidelity

That makes intuitive sense. A Treasury yielding 5% offers investors something Bitcoin never will: contractual income backed by the U.S. government. Higher yields also increase borrowing costs and tighten financial conditions, historically an uncomfortable combination for speculative assets whose valuations depend heavily on available liquidity.

But the relationship starts breaking down when the window gets longer. An analysis of Bitcoin and Treasury yields found that their long-term return correlation has hovered near zero for much of Bitcoin’s history. There have been extended periods when Bitcoin climbed alongside yields and others when both fell, making the level of rates surprisingly poor as a standalone explanation for the cryptocurrency’s performance. Fidelity