For Bitcoin Bulls, a Reality Check: The 10-Year Treasury Yield Stays Elevated Despite Rate-Cut Speculation

Crypto traders banking on Federal Reserve rate cuts to drag bond yields and the dollar lower are finding that markets aren’t responding the way they used to. Despite strong expectations for continued easing, key macro indicators are signaling resistance.

The Fed is widely anticipated to deliver a 25-basis-point cut on Dec. 10, bringing rates to 3.5%-3.75% and extending the easing cycle launched last September. Major institutions, including Goldman Sachs, expect further reductions next year that could take rates to roughly 3%. Typically, such shifts would push Treasury yields down and weaken the dollar—a combination that historically boosts demand for risk assets like bitcoin.

But long-term yields aren’t falling. The 10-year Treasury continues to trade comfortably above 4% and has risen by about 50 basis points since the first cut in mid-September 2024. Market watchers say the persistence of high yields reflects growing concerns over U.S. fiscal health, an expanding supply of government debt, and lingering inflation worries.

Fidelity summed up the pressure clearly: as federal borrowing increases, more Treasuries hit the market. Without proportionate demand, yields rise and bond prices fall.

External forces are amplifying the trend. Traders are preparing for a possible rate hike from the Bank of Japan, while Japanese Government Bond yields continue to climb. Throughout the 2010s and the COVID era, Japan’s ultra-low yields helped hold global borrowing costs down. With that dynamic reversing, global yields face upward momentum.

The dollar index is also defying expectations. Despite widespread confidence in future rate cuts, the index has shown reduced sensitivity to easing signals. Much of the anticipated policy shift appears to be fully priced in, and the relative strength of the U.S. economy is helping keep the greenback supported. After sliding earlier this year, the index stalled near 96.000 in September before rebounding toward 100.00 multiple times.

Taken together, firm Treasury yields and a resilient dollar suggest that markets may be operating under a new regime. The once-reliable sequence—Fed dovishness leading to lower yields, a weaker dollar, and a tailwind for crypto—looks far less predictable today. Crypto bulls hoping for a straightforward macro boost might need to recalibrate their expectations.