The latest research report published by Binance Research systematically analyzes the evolving connections between the bond market and the cryptocurrency market, identifying and dissecting the influencing pathways, assessing the current market conditions, and predicting potential future trends and their impacts through scenario simulations.
The report points out that the bond market is influencing the cryptocurrency market's movements through multiple channels, primarily including risk appetite, liquidity, fluctuations in opportunity costs, and macroeconomic linkage mechanisms. Historical data shows that the correlation between Bitcoin and the yield on 10-year U.S. Treasury bonds has phase characteristics (positively correlated from 2021 to 2022, then turning negative from 2022 to 2023). Additionally, the widening of the yield curve spread (e.g., 10-year minus 2-year) has historically been positively correlated with Bitcoin, while the widening of credit spreads (high-yield U.S. bonds) has shown a stable negative correlation.
The report also notes that there are multiple structural factors behind the current volatility in the bond market, including tariff uncertainties, sticky inflation, government debt issuance, and the potential liquidity withdrawal caused by the Treasury General Account (TGA) supplement in the context of low Federal Reserve overnight reverse repo balances.
Finally, the report emphasizes that the direction of the cryptocurrency market may, to some extent, depend on the stability of the bond market and changes in the macro environment. If uncertainty persists, the market may maintain a range-bound oscillation; if a 'soft landing' is achieved, it is expected to drive a market rebound; and if a severe crisis occurs, it may trigger deep sell-offs and deleveraging in the cryptocurrency market.
