Bitcoin benefits as yield drops
Source: www.tradingview.com
The US02Y has declined markedly over the last eight trading days from a high of 5.09% to current levels of 3.74%. This has proven to be a tailwind for bitcoin. The cryptocurrency is up over 25% over the last week.
Concerns over the health of the global banking system are a key driver. Credit Suisse's AT1 were vapourised in UBS's takeover of the bank, with $17bn wiped out. In response, capital is seeking the safety of sovereign bonds.
The US 02-year note which is particularly sensitive to monetary policy has declined to 6-month lows as traders bet that the Fed won't hike on 22 March. The CME Fedwatch tool has just 1:1 odds of a 25 bps rate hike. The speculation is that any further rate increases may add to the banking sector woes, dent confidence, and cause economic damage.
Bitcoin benefits in a lower rate environment. Just a few weeks back, and before the failure of SVB, markets had priced in a 5.6% terminal rate. This has been marked down aggressively to 4.75% by May. This repricing is supporting the cryptocurrency.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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