Bitcoin breaks records - but rising yields could rain on the parade

Bitcoin just smashed through another all-time high, crossing $109,800 and lighting up the crypto crowd like it’s 2021 all over again. The bulls are back, the memes are flying, and institutional money is pouring in. But just as things were starting to feel a little too euphoric, something old-school snapped everyone back to reality: the bond market.

Because while Bitcoin’s been partying, yields have been rising - and fast. And if there’s one thing that can spook speculative assets, it’s the sudden reminder that traditional finance still writes the rules on risk.

Bitcoin’s big moment - Fueled by ETFs and Institutional FOMO

Let’s start with the good stuff. Bitcoin didn’t just edge past its previous high - it blew through it. Up 47% since April’s dip to $75K, BTC’s rally has been supercharged by inflows from U.S. spot Bitcoin ETFs, which racked up $7.4 billion in net inflows over just five weeks. That’s not retail punting for fun - that’s serious capital making a bet.

Source: Coinglass

It’s not just ETFs, either. Futures open interest hit a record $75.14 billion, showing that traders are all-in on this trend. Add in corporate moves like Indonesia’s DigiAsia Corp planning a $100 million Bitcoin treasury reserve, and it’s clear: institutions aren’t sitting this one out.

The setup looked nearly perfect. Until it wasn’t.

Then the bond auction happened

On 21 May, the U.S. Treasury held a routine 20-year bond auction. It should’ve been a non-event. Instead, it sent shockwaves through global markets.

Investor demand was weak. The auction was priced at a 5.047% yield, slightly above the expected 5.035%. That tiny gap? It’s called a “tail” - and this one, at 1.2 basis points, was the largest since December. In bond-speak, that’s code for investors who are worried.

Source: Kobeissi Letter, X

The fallout was fast:

• The S&P 500 fell nearly 80 points in half an hour
• The 10-year Treasury yield jumped to 4.586%
  
• The 30-year yield hit 5.067%

Source: Kobeissi Letter

That’s not just noise. That’s the market pricing in bigger risks: rising deficits, sticky inflation, and the possibility that the Fed won’t be cutting rates anytime soon.

Why bond yields matter for Bitcoin

Crypto isn’t in its own little universe anymore. Like it or not, Bitcoin now dances to the macro beat - and right now, the rhythm is changing.

Here’s how soaring yields ripple through crypto:

• Higher yields strengthen the U.S. dollar → Bitcoin tends to move inversely to the dollar
  
• Tighter financial conditions → Less liquidity and less appetite for high-risk trades
  
• Risk-off sentiment → Capital flows back into traditional safe havens like bonds, not Bitcoin

So even if the fundamentals look great - ETF inflows, corporate adoption, bullish momentum - the mood can turn quickly when macro headwinds start picking up. And that's what we saw this week.

The bigger picture: Trouble brewing in the background

The weak auction wasn’t a fluke - it’s a symptom. The U.S. is running a 7% budget deficit, inflation is still lurking, and trade tensions are re-emerging as Trump ramps up his campaign trail. Investors are starting to say, “If you want us to lend you money, you’re going to have to pay more.”

That adds pressure not just on the Treasury, but on every asset priced off yields - including crypto.

Analysts at K33 Research warned that macro risks could inject fresh volatility into Bitcoin’s uptrend, especially if upcoming headline events disappoint. Case in point: Trump’s $TRUMP Gala and VP JD Vance’s appearance at Bitcoin 2025 might move sentiment - but they’re no match for Treasury market shocks.

What traders should keep an eye on

This doesn’t mean the Bitcoin bull run is over - but the game just got more complicated. If you’re in the market, here’s what to watch:

• U.S. Treasury yields – particularly the 10- and 20-year
  
• Inflation prints and Fed commentary – to gauge rate expectations
  
• ETF inflows – a slowdown here would be a red flag
  
• Futures open interest – high levels mean potential for sharp reversals
  

Right now, Bitcoin’s still flying high - but the air is getting thinner. The next leg up (or down) could depend less on crypto news, and more on how the macro winds blow.

Bitcoin technical outlook: Further rally or reversal?

Bitcoin is still very much in a bullish trend. Institutions are coming in, ETFs are delivering inflows, and price action remains technically strong.

But this week’s bond market shock is a reminder that macro still matters. If yields continue rising and financial conditions tighten further, Bitcoin could lose altitude fast. For now, traders remain optimistic - but the rally is skating on thinner ice than it appears.

So the big question remains: is this just a wobble, or the start of something bigger? The next bond auction might tell us more.

At the time of writing, Bitcoin’s upside momentum is meeting some resistance, with a wick forming at the top of the up move. However, the volume tells a story of sellers not moving in with enough conviction which could lead to more upside. If sellers fail to force a reversal, buyers could struggle at the $112,000 price level that’s currently holding prices. If we see a slump, on the other hand, prices could find support floors at the $102,990 and $93,000 price levels. 

Source: Deriv MT5

Disclaimer

The information contained within this article is for educational purposes only and is not intended as financial or investment advice. We recommend you do your own research before making any trading decisions.

This information is considered accurate and correct at the date of publication. Changes in circumstances after the time of publication may impact the accuracy of the information.

The performance figures quoted are not a guarantee of future performance.