The same rate, two opposite readings. The rise in US bond yields immediately penalizes bitcoin by making risk-free investments more attractive. Yet when it arises from concerns about Washington’s debt and deficit, this tension also fuels the monetary argument of BTC defenders.
Bitcoin therefore remains caught between its behavior as a short-term risky asset and its claimed status as an alternative to a currency whose supply increases with the financing needs of States. Risk asset or safe haven? Welcome to the heart of the paradox.
In the short term, high rates remove liquidity from Bitcoin
The mechanics start with the yield on ten-year American bonds. When it exceeds 5%, an investor can obtain high remuneration on an asset considered low risk. Technology stocks, gold and bitcoin must then offer a greater prospect of gain to maintain the same place in a portfolio.
However, Bitcoin does not produce any regular income. Its valuation essentially depends on demand and the quantity of capital available. When the cost of financing increases, investors therefore reduce their most volatile positions as a priority. Sales then trigger liquidations on leveraged contracts, which amplifies the initial move.
This sensitivity temporarily brings bitcoin closer to technology stocks and its higher beta even accentuates variations: it falls further when financial conditions tighten, but also benefits more quickly from their easing.
And the pressure doesn't just come from the United States. The yield on the ten-year Japanese bond has exceeded 3%, a level not seen since 1996. Japanese insurers and pension funds thus have an additional reason to keep their capital in their domestic market rather than buying American bonds or other foreign assets.
This potential repatriation reduces a source of global liquidity. Japan remains a major holder of American debt and the movements of its investors therefore have repercussions on all markets, including cryptocurrencies.
In the long term, US debt fuels the BTC monetary narrative
But the same increase in yields produces a different effect when you expand the horizon. The US federal debt now exceeds $40 trillion, while the annual cost of servicing it has crossed $1 trillion. According to U.S. Treasury data, interest represents approximately 19% of federal spending in fiscal year 2026.
Each rate increase gradually increases this burden as old bonds mature and are replaced by new, more expensive securities. Washington must then borrow more, reduce its spending or increase its revenue. In fact, persistent deficits maintain a significant need for new issues.
This is where the argument in favor of Bitcoin appears. Its maximum supply remains set at 21 million units, regardless of deficits, elections or the cost of refinancing a state. The more investors demand high remuneration for holding US debt, the more they signal their concerns about inflation, public finances or the future value of the dollar.
This comparison does not, however, transform Bitcoin into an immediate refuge. Institutional holders arriving via ETFs also think in terms of risk, volatility and relative return. When bonds yield more, they can reduce their exposure to BTC even if they share its long-term thesis.
