Summary: Bitcoin’s Evolving Role in a Changing Financial Landscape
Bitcoin is rising despite macroeconomic stress, with price currently near $109,890.
Bond yields are surging in the U.S. and Japan, signaling market discomfort with debt sustainability.
U.S. fiscal outlook, inflation risks, and foreign investor pullback are pressuring Treasurys.
Spot Bitcoin ETFs continue to attract institutional capital, reaching $104B AUM.
Analysts suggest Bitcoin is playing a dual role: as a high-performing asset and an emerging store of value.
Bitcoin Climbs as Bond Market Volatility Sparks Reassessment of Traditional Safe Havens
Bitcoin is showing resilience in the face of rising global bond yields, with the price of BTC hovering around $109,890. As concerns about sovereign debt sustainability and inflation mount, analysts note that investor behavior is shifting—favoring alternative assets such as Bitcoin.
Bond markets in both the United States and Japan are flashing signals of stress. Surging yields, declining consumer confidence, and weakening demand for long-term sovereign debt are challenging the conventional view of government bonds as safe-haven assets. In contrast, Bitcoin’s performance has remained strong, despite broader macroeconomic uncertainty.
Rising Bond Yields Reflect Fiscal Pressure and Policy Constraints
In the United States, the 30-year Treasury yield reached 5.15% on May 22, its highest since 2023, while the 10-year yield climbed to 4.48%. The rapid rise in yields is a reflection of inflation concerns, increased government borrowing, and policy constraints that limit the Federal Reserve’s ability to ease conditions without risking inflation resurgence.
With U.S. national debt exceeding $36.8 trillion, the cost of interest payments is expected to hit $952 billion in 2025. Although former President Donald Trump previously emphasized lowering yields as a key economic objective, analysts note that the tools typically used to achieve this—rate cuts or quantitative easing—remain constrained by inflationary risks.
Investor sentiment has also been impacted by the loss of the U.S. government's last AAA credit rating, which has contributed to skepticism around long-term fiscal stability.
Japan’s Yield Spike Raises Questions About Foreign Demand for Treasurys
Japan, the largest foreign holder of U.S. Treasurys, is also facing mounting debt challenges. Since the Bank of Japan raised interest rates from -0.1% to 0.5%, yields on Japanese long-dated bonds have surged. The 30-year yield recently reached 3.1%, the highest in decades.
Prime Minister Shigeru Ishiba’s warning that Japan’s fiscal situation may be “worse than Greece” highlights the scale of concern. Rising domestic yields may prompt Japanese institutional investors—who have traditionally supported U.S. bond markets—to reassess their foreign exposure, potentially reducing demand for U.S. Treasurys.
Institutional Investors Turn to Bitcoin Amid Traditional Market Uncertainty
Despite historically acting as a risk-on asset, Bitcoin is increasingly being viewed by some investors as a potential hedge against volatility in fiat-denominated debt markets.
According to CoinGlass, total assets under management in spot Bitcoin ETFs have surpassed $104 billion, an all-time high. This trend reflects growing institutional interest in Bitcoin as both a portfolio diversifier and a long-term store of value.
In contrast, Bank of America data cited by The Kobeissi Letter showed that 38% of institutions were underweight U.S. equities in early May, the lowest since May 2023—suggesting a broader reallocation is underway.
