Bitcoin vs. U.S. Treasury Bonds: The Digital Upset Nobody Saw Coming

Forget ’safe haven’—Bitcoin’s eating bonds for breakfast.

Once the boring backbone of institutional portfolios, U.S. Treasury bonds are getting outshone by crypto’s volatility—and somehow, investors aren’t blinking. Here’s how the script flipped.

Yield? Try ’yielded dominance.’

While the Fed plays whack-a-mole with inflation, Bitcoin’s fixed supply and 10x returns since 2023 have pension funds quietly reallocating. (Wall Street still won’t admit it over martinis.)

The closer: In a world where governments print trillions before lunch, maybe ’risk-free’ is the real gamble.

$105,268 and U.S. 10-year Treasury bonds has hit a historical low. A 60-day rolling correlation chart shared by Andre Dragosch of Bitwise Europe Research indicates that the two assets are now nearly moving in opposite directions. This significant correlation breakdown signals a potential investor shift from traditional bond security to the leading cryptocurrency. Despite both Bitcoin’s price and 10-year Treasury yields rising simultaneously, the narrative underpinning this phenomenon has begun to shift.

ContentsBitcoin and Treasury Bonds MOVE ApartSignals of Investor Preference Rotation

Bitcoin and Treasury Bonds Move Apart

For those unfamiliar, correlation measures how two assets move in sync. Values approaching zero or turning negative suggest a divergence in directions. Dragosch’s current chart shows the correlation hitting record negative levels, indicating that Bitcoin is now priced independently, and even inversely, from Treasury bonds.

Analysts note that bitcoin is increasingly taking the place of bonds used for “portfolio protection” among growth-seeking investors. As market psychology shifts, risk perception is also transforming.

Observers argue that this divergence is not only technical but structural. Expectations of high inflation and budget deficits push long-term bond yields higher while suppressing prices. In this environment, Bitcoin stands out with its limited supply and alternative value storage property. Institutional reports showing increased allocations to Bitcoin and frequent referencing of “digital gold” in cash management policies prove the narrative’s acceleration. Consequently, while correlation is at rock bottom, interest is peaking.

Signals of Investor Preference Rotation

In early April, the 10-year yield was at 4.21%, dropping to 3.86% by mid-month, only to climb swiftly to 4.59%. During the same period, Bitcoin initially fell from 82,000 dollars, then ROSE 23% by April’s end, and jumped from 94,000 to 112,000 dollars in May. This simultaneous demand for both assets highlighted the “risk-on” theme, reflecting that investors are diversifying their portfolios with both interest-bearing and cryptocurrency-focused positions in search of returns amid inflation worries.

However, towards the month’s end, profit-taking occurred in both arenas. The easing in bond yields to 4.42% and Bitcoin’s pullback by about 5% suggest the market is tempering its short-term exuberance yet not disrupting the overall rotation theme. As interest rate uncertainty lingers, the “exit bonds, enter cryptocurrency” notion remains on the agenda for many actors, particularly fund managers.

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