The recent rise in US Treasury yields may not have the inverse correlation-based effect on Bitcoin price that it has had in the past. The demand for US Treasurys is affected by inflation expectations and investors seeking refuge in a safe asset during periods of economic turbulence.
The 5-year US Treasury yield reached its highest level in three months, indicating that investors are not expecting inflation to drop below the central bank’s target anytime soon. However, investors are willing to forego rewards in exchange for the security of owning the lowest-risk asset.
While the typical inverse correlation between Bitcoin and the US Treasury yield has been invalidated recently, higher government bond yields may be due to increased expectations of an economic crisis ahead. It remains uncertain whether Bitcoin will work as a hedge during such a period of uncertainty.
This article does not contain investment advice or recommendations and readers should conduct their own research before making any investment decisions.