Bitcoin’s struggle below its 200-day average may be tied to elevated Treasury yields

Bitcoin continues to face downside pressure, holding below its 200-day simple moving average despite recent regulatory progress in Washington, as rising U.S. Treasury yields weigh on sentiment.

The cryptocurrency has failed to capitalize on the Senate Banking Committee’s approval of the Clarity Act, which marked a key step toward broader crypto market structure legislation. Instead, macro forces—particularly the steady rise in bond yields—have taken center stage.

The U.S. two-year Treasury yield climbed to 4.05% during Asian trading hours, its highest level since June 2025. The move represents a 13-basis-point increase this week and a surge of more than 65 basis points since March, signaling a meaningful shift in market expectations around Federal Reserve policy.

This repricing has been driven by stronger-than-expected inflation data. April’s CPI and PPI readings came in hot, reinforcing concerns that inflation may remain persistent, especially amid rising energy prices and ongoing geopolitical tensions tied to Iran.

As inflation risks build, investors are adjusting their outlook for interest rates. With the Fed’s benchmark rate currently in the 3.50%–3.75% range, the rise in short-term yields suggests markets are increasingly factoring in the possibility of at least one additional rate hike.

According to CME FedWatch data, the probability of a December rate increase has risen to over 44%, up sharply from 22.5% just a week ago. This marks a notable reversal from earlier expectations that the Fed would begin cutting rates before the end of 2026.

The shift in rate expectations runs counter to President Donald Trump’s push for significantly lower borrowing costs. Trump has repeatedly called for rates to fall as low as 1% to support economic growth. However, under Federal Reserve Chair Jerome Powell, policymakers have maintained a cautious approach, keeping rates relatively steady after gradually reducing them from around 5% in 2022.

Markets are also beginning to look ahead to potential changes in Fed leadership. Former governor Kevin Warsh, widely viewed as more dovish, has been floated as a possible successor, though policy direction remains firmly under Powell for now.

Rising Treasury yields are increasing the opportunity cost of holding non-yielding assets such as bitcoin and gold. As government bonds offer more attractive returns, capital is being drawn toward these traditionally safer instruments, which also play a central role in global financial markets as collateral and liquidity anchors.

Bitcoin is currently trading near $81,000, showing little movement on the day but still below its 200-day moving average just above $82,000—a level closely watched by traders as a signal of longer-term trend direction.

Gold has also come under pressure, slipping 0.7% to $4,614.

In contrast, the tokenized Treasury sector is gaining momentum. Higher yields are boosting demand for blockchain-based access to government debt, with total value locked in these protocols surpassing $15 billion, reflecting growing investor interest in yield-bearing digital assets.