Bond Market Shift Sends Warning Signals for Bitcoin

The bond market has undergone a significant shift in recent days, with traders fully pricing in a Fed interest rate hike by year-end. This change in expectations has led to a tightening of financial conditions, weighing on risk assets such as equities and Bitcoin.

According to Nomura, the persistent inflation and geopolitical risks have led them to drop their 2026 Fed rate cut forecast. The CME FedWatch pricing also shows a roughly 58% chance of at least one 25-basis-point hike by the end of the year.

The long-term Treasury yields have been climbing before bond traders fully priced a hike, with the 30-year yield reaching its highest level since 2007. The 10-year yield has also hit a multi-year high, making Treasuries more attractive than speculative assets.

This shift in the macro backdrop has significant implications for Bitcoin's price trajectory. With equities and Treasury yields moving in opposite directions to a historically rare degree, higher yields will tighten the BTC liquidity environment and weigh on equities, dragging crypto lower as part of the broader risk complex.