Treasuries are amplifying market selloffs and Bitcoin is paying the price
For much of the past two decades, stocks and Treasuries offset each other: when equities fell, bonds rallied. That broke around 2020 as inflation volatility became the main driver of markets. When inflation dominates, stocks and bonds often move together, so long-duration Treasuries no longer provide the same hedge. Rising deficits, heavy Treasury supply, and weaker foreign demand have pushed long yields above 5%, with investors favoring bills and short-dated paper over long bonds. This reflects a broader shift away from duration risk. Bitcoin is now tightly tied to macro conditions too. It tends to benefit from falling real yields, a weaker dollar, and easier financial conditions, so higher Treasury yields and weaker risk appetite pressure it. That makes Bitcoin and Treasuries less rivals than fellow victims of an inflationary, risk-off regime. Long-term, Bitcoin’s fixed supply can look attractive in a strained fiscal system, but in the short run the same forces that support its case also weigh on its price.
