Bitcoin's price declined on Wednesday as U.S. Treasury yields surged, with the 10-year yield climbing above 5% and reaching its highest level since 2007. The leading cryptocurrency traded down 2% over a 24-hour period, changing hands for $84,357.
The decline marks a reversal from earlier in the week, when Bitcoin had rallied to nearly $87,330 as investors added to exchange-traded fund positions. The pullback accelerated on Wednesday afternoon following the U.S. Treasury's announcement that it would purchase up to $6 billion of longer-dated government debt on Thursday.
Economic Data Drives Yields Higher
The 10-year Treasury yield breached 5% on Wednesday for the first time in 19 years after September's flash PMI data exceeded forecasts, pushing the composite index to a five-year high. Input costs across manufacturing and services rose to their highest level since October 2022, driven largely by fuel and transportation costs, while wage pressure also strengthened.
Headwinds for Bitcoin
Rising Treasury yields typically weigh on Bitcoin's price. When government bonds offer 5% yields, holding an asset that generates no income becomes comparatively more expensive. Higher rates also tend to strengthen the U.S. dollar and reduce appetite for risk-on assets like cryptocurrencies. Bitcoin has repeatedly retreated this year when yields rose amid inflation concerns, with these moves often amplified by exchange-traded fund outflows and forced selling by leveraged traders.
