Analysis: The persistent flattening of the U.S. Treasury yield curve sends a hawkish signal, potentially limiting Bitcoin's short-term rebound space

Odaily Odaily reported that the bond market is sending a more tightening interest rate signal, which may continue to suppress risk assets such as Bitcoin. Currently, the spread between the U.S. 2-year and 10-year Treasury yields has narrowed to about 28 basis points, the narrowest level since April 2025, indicating a significant flattening of the yield curve. This change is typically seen as an enhancement of market expectations for tighter monetary policy or "higher interest rates for longer."

Skanda Amarnath, Executive Director of the policy research institution EmployAmerica, pointed out that this flattening trend is "one of the clearest market signals that the Federal Reserve is becoming more hawkish." In a more hawkish interest rate environment, market expectations are that rates will remain high for a longer period, thereby enhancing the appeal of fixed-income assets and weakening the allocation demand for non-yielding assets like Bitcoin.

Beyond the 10-year to 2-year spread, the spread between the 30-year and 5-year Treasury yields has also fallen to its lowest level since last April, further reinforcing the overall flattening trend of the yield curve.

Market participants believe this change represents a significant reversal from the environment earlier this year, which was characterized by a "steepening curve and bets on rate cuts." In the latest round of policy signals, the Federal Reserve kept interest rates unchanged, but the dot plot indicated a higher future rate path compared to previous projections, with the median interest rate expectations shifting upwards, reinforcing the expectation of "higher rates for longer."

Analysts suggest that if the high-interest-rate environment persists, risk assets like Bitcoin may find it difficult to form a strong upward trend in the short term. The market could enter a phase of volatile pressure, potentially intersecting with the timeline for bottoming expectations based on part of the halving cycle. (CoinDesk)