Analysis: US Treasury yield curve continues to flatten, releasing hawkish signals, potentially limiting Bitcoin's short-term rebound

Odaily Planet Daily News The bond market is emitting increasingly tighter interest rate signals, which may continue to pressure risk assets such as Bitcoin. Currently, the spread between the US 2-year and 10-year Treasury yields has narrowed to approximately 28 basis points, the narrowest level since April 2025, indicating a significant flattening of the yield curve. This change is typically seen as a market expectation of tighter monetary policy or a "higher for longer" interest rate environment.

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

Beyond the 10-year versus 2-year spread, the spread between 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 yield curve and bets on rate cuts. In the latest round of policy signals, the Federal Reserve held interest rates steady, but the dot plot indicated a higher future interest rate path compared to previous projections, with median interest rate expectations revised upward across the board, strengthening the "higher for longer" narrative.

Analysis suggests that if the high-interest-rate environment persists, risk assets like Bitcoin may find it difficult to establish a strong upward trend in the short term. The market could enter a phase of choppy consolidation and pressure, potentially interweaving with certain bottom-anticipation time windows based on the halving cycle. (CoinDesk)