For a long time, the market generally believed that continued increases in government bond yields in developed economies would put pressure on Bitcoin and the broader cryptocurrency market. However, judging from the actual performance of the foreign exchange market this year, this traditional view is being challenged.
The previous logic was not complicated. When bond yields on safe-haven assets such as those in the United States rise to 4% to 5%, assets such as Bitcoin and gold that do not generate income become relatively less attractive. According to this theory, funds tend to flow toward assets that can provide higher returns, while higher bond yields also generally attract foreign capital inflows, thereby driving appreciation of the currencies of the relevant countries.
But the foreign exchange market this year has not operated entirely according to this pattern.
Since the beginning of this year, the yield on the U.S. 10-year Treasury has risen by 58 basis points and reached 4.81% this week, the highest level since October 2023. However, during the same period, the U.S. Dollar Index, which tracks the performance of the dollar against a basket of major currencies, rose only 0.9% to 99.22.
This phenomenon also cannot simply be attributed to bond yields in other countries generally exceeding those in the United States. In fact, that is not the case. Taking Germany, a major economy of the European Union, as an example, its 10-year government bond yield has risen by 45 basis points this year, an increase that is actually lower than that of the United States.
Japan presents an even more obvious contrast. Japan’s 10-year government bond yield has risen sharply by 90 basis points this year, but the yen has not strengthened according to traditional theory. Instead, it recently fell to a forty-year low.
This means that, at least based on the current performance of the foreign exchange market, higher bond yields are no longer necessarily viewed as a positive factor supporting the domestic currency. The market seems to be starting to interpret rising yields as a signal of increased fiscal pressure rather than an indication of stronger fiscal strength.
If this market pricing logic continues, the traditional Bitcoin investment logic may also need to be reconsidered.
In an environment where rising yields instead indicate rising risks, investors may pay more attention to assets whose supply and value characteristics governments cannot change simply by issuing more currency or depreciating their currencies. Hard assets such as Bitcoin and gold therefore have characteristics that fit this logic.
Analysts believe that potential financial repression in the future also deserves attention. Maintaining relatively low inflation-adjusted real interest rates and promoting currency depreciation to reduce the debt burden could become factors providing bullish support for Bitcoin and gold.
Judging from recent market performance, the renewed weakness of the U.S. Dollar Index has also brought a relatively positive signal for Bitcoin. As of the writing of this article, Bitcoin was trading near $77,700, up 0.8% since midnight Coordinated Universal Time.
Meanwhile, some smaller cryptocurrency tokens performed even more strongly. ARB rose 20% over the past 24 hours, while LIT rose 12% during the same period.
Regarding U.S. regulatory policy, Securities and Exchange Commission Chairman Paul Atkins confirmed in an interview with Fox Business News that the Senate plans to hold a key cloture vote on the agenda to advance the CLARITY Act on September 15, 2026.