Bitcoin drops 4.2% to $26,800 as U.S. Treasury yields rise

Bitcoin slid 4.2 % to around $26,800 on Wednesday, the lowest level in a week, as U.S. Treasury yields jumped to 4.85 % on the 10‑year note, the highest since early 2007. The move came after data showed the U.S. consumer price index rising faster than expected, prompting investors to price in a more aggressive Federal Reserve tightening cycle. At the same time, Brent crude climbed above $95 a barrel, driven by renewed concerns over supply disruptions in the Middle East.

The rally in Treasury yields reflects a broader shift in markets toward safe‑haven assets after the inflation surprise. Higher yields make fixed‑income investments more attractive, pulling money away from risk‑on assets such as cryptocurrencies. Bitcoin, which has historically been sensitive to shifts in monetary policy, often falls when real yields rise because its appeal as a hedge against inflation weakens. The surge in oil prices adds another layer of pressure, as higher energy costs can dampen consumer spending and corporate profit margins, further reducing appetite for speculative assets.

Analysts at major banks noted that the confluence of rising yields and oil prices could keep Bitcoin under pressure for the next few weeks. “We’re seeing a classic risk‑off environment,” said Sarah Liu, a senior market strategist at Morgan Stanley. “Investors are reallocating toward government bonds and away from assets that don’t generate cash flow, like Bitcoin.” Crypto exchanges reported a net outflow of roughly $1.2 billion from futures contracts in the past 24 hours, underscoring the shift in trader sentiment.

Looking ahead, the market will watch upcoming Fed minutes and the next CPI release for clues on whether the central bank will accelerate rate hikes. If yields continue to climb, Bitcoin could test the $25,000 support level, a key threshold that has held in past downturns. Conversely, any easing in inflation data or a de‑escalation of geopolitical tensions could reverse the trend, pulling yields lower and potentially reviving interest in risk assets. For now, the cryptocurrency’s short‑term outlook remains tied to broader macroeconomic forces rather than any Bitcoin‑specific catalyst.