US Treasury yields broke 5% to suppress BTC, and institutional divestment caused it to fall 33% from ATH

According to Woofun AI, the yield on 10-year US Treasury bonds issued by the US Treasury has climbed to 5.3%, hitting the highest level since 2007. This change in macrofinancial indicators has set a clear negative tone for the crypto market.

The high-yield environment is reshaping the logic of global capital allocation, directly squeezing Bitcoin's safe-haven narrative and capital inflow channels. As time deposits, bonds, and other fixed income products provide more attractive risk-free returns, investors tend to withdraw funds from high-risk assets such as stocks.

Although some market participants still claim that Bitcoin can withstand the depreciation of fiat currencies, the price performance reveals the cruelty of reality: Bitcoin is currently trading at $84,000, which is a 33% drop compared to the all-time high price (ATH) of $126,000 set in October last year.

According to data compiled by Woofun AI, this fund diversion effect is not only reflected at the retail level, but also profoundly affects institutional behavior. As borrowing costs rise, speculative funds are forced to withdraw from volatile assets to raise liquidity to buy fixed income products, causing Bitcoin, as “digital gold,” to face selling pressure similar to gold.

Notably, many institutional investors are gradually withdrawing ETF products that can participate in Bitcoin investments without holding a cryptocurrency wallet or private key. This wave of divestment has further intensified the downward pressure on the market, making it difficult for Bitcoin to reproduce its previous brilliant trend in the short term.

Judging from the underlying mechanism, Bitcoin's value support is closely related to its issuance mechanism, but its 'digital gold' attribute is facing liquidity difficulties in a high interest rate environment. Bitcoin relies on a proof-of-work (PoW) consensus mechanism, which consumes a lot of energy, and experiences a scheduled 'halving' event every four years, causing mining rewards to be cut in half, making profits significantly more difficult. Of the total supply of 21 million pieces, more than 20 million have already been excavated, and the remaining 1 million are not expected to be fully released until 2140.

This extreme scarcity should have made it an ideal tool to combat inflation and the depreciation of the dollar, similar to gold. However, rising US Treasury bond yields often strengthen the dollar's position, prompting investors to stay away from non-interest-bearing assets such as gold and instead invest in low-risk instruments that provide fixed interest. Therefore, although Bitcoin has the potential to hedge against the depreciation of fiat currencies for a long time, its liquidity is severely limited in the current context of high interest rates, making it difficult to attract new incremental capital into the market.

Looking ahead, Bitcoin's trend will be a sharp game between favorable long-term monetary expansion and short-term interest rate pressure. Although monetary expansion policies may eventually cause fiat currencies to depreciate, thereby benefiting hard assets such as Bitcoin, investors must clearly recognize that the current high interest rates and rising US Treasury bond yields constitute significant short-term resistance. Unless there is an inflection point in the yield curve and risk appetite capital returns to the market, it will be difficult for Bitcoin to break through the current suppression range.

This market dynamic shows that until macro-financial conditions improve, it is extremely unlikely that Bitcoin will hit an all-time high again, and market participants need to be wary of potential risks brought about by short-term fluctuations.