Cryptocurrency prices continued to rise through the last quarter of 2024 despite a significant increase in interest rates, but that trend may now be changing.
In the final months of 2024, crypto markets enjoyed a strong bull run, but the global surge in government bond yields seems to have become too substantial to overlook.
The U.S. 10-year Treasury yield, often considered a global benchmark, rose to 4.70% as of Wednesday, approaching a multi-year high. This marks an increase of over 100 basis points since the Federal Reserve initiated its first rate cut in September. In the U.K., the situation is even more pronounced, with the 30-year Gilt yield hitting 5.35%—its highest level since 1998. Since the Fed’s rate cut in September, the yield has risen by 105 basis points.
The rise in yields isn’t confined to the U.S. and U.K.; countries like Germany, Italy, and Japan have experienced similar movements. Japan’s 10-year JGB yield, while relatively small at 1.18%, has surged to its highest level in nearly 15 years.
Although these rising yields didn’t initially seem to affect the crypto market, where bitcoin and other major cryptocurrencies reached multi-year or record highs in December, the price action has started to change. For example, bitcoin is down over 10% from its peak above $108,000 set just three weeks ago, with several other cryptocurrencies seeing even larger declines.
However, there’s an exception to this trend in China, where bond yields are falling due to concerns over deflation. According to an X post by The Kobeissi Letter, China is currently experiencing its longest deflationary period since 1999.
