Treasury Yields vs BTC

Treasury Yields vs BTC

US Treasury yields are the percentage returns on investment or the interest rates that the U.S. government pays to borrow money from investors by issuing debt securities with different maturities. Treasury yields affect how much the government pays to borrow and how much investors earn by buying government bonds.

Because Bitcoin can be used as a hedge against government fiscal and monetary management, many investors want to monitor US Treasury Yield rates alongside Bitcoin price.

Treasury yields shown versus Bitcoin price:

circle 1 Month

circle 3 Month

circle 6 Month

circle 1 Year

circle 2 Year

circle 3 Year

circle 5 Year

circle 10 Year

circle 30 Year

Normally longer-term Treasury securities have higher yields than shorter-term ones. That’s because the longer duration of those securities exposes them to more of a risk if interest rates rise over time.

The Treasury yield curve (or term structure) shows the yields for Treasury securities of different maturities. It reflects market expectations of future interest rate fluctuations over varying periods of time. Bitcoin price is also impacted by interest rate changes as well as market perceptions around government ability to pay back loans over time.

Treasury yield spreads are the difference between the interest rates of short-term and long-term government bonds.

The latest value of all bonds rates make up the yield curve. Yield curve inversions occur when short-term bonds have a higher yield than long-term bonds. This has been one of the most successful predictors of economic recessions. By subtracting a shorter-maturity yield from a longer maturity yield, we can easily gauge differences between the two.

Whenever for example the 10Y-2Y spread turns negative, then the yield on the long-term 10Y bond is lower than the yield of the short-term 2Y bond. This is a bearish sign where investors expect yields on longer-maturity bonds to become even lower in the future. In bearish times investors seeking safe investments tend to purchase these longer-dated bonds over short-dated bonds, bidding up the price of longer bonds and thereby further driving down their yield.

Historically economic recessions have followed after the 10Y-2Y become inverted.