On April 3, US government bond yields dropped to their lowest in six months, signaling investor concerns about the global trade war and a weakening dollar. The yield on the 10-year Treasury note fell to 4.0%, indicating strong buyer interest. While a possible recession may seem bad for Bitcoin, lower bond returns could drive more investments into alternative assets like cryptocurrencies. Additionally, tariffs create supply issues, raising inflation risks, which may further push investors toward Bitcoin. With gold reaching new highs and the dollar weakening, a gradual shift towards alternative assets is emerging. This shift strengthens Bitcoin’s long-term potential, especially as the Market shows resilience amid economic uncertainty.
On April 3, a significant drop occurred in long-term US government debt yields, reaching their lowest level in six months. This change came as investors expressed increasing worries about the global trade war and a weakening US dollar. The yield of the 10-year Treasury note fell to around 4.0%, down from 4.4% just a week prior, indicating a high demand from buyers.
As the risk of an economic recession rises, many might think this would be bad news for Bitcoin. However, lower returns from traditional investments like bonds lead many investors to look for alternative assets, which often include cryptocurrencies. If inflation continues to increase, it’s likely that traders will move away from bonds, making Bitcoin’s potential for a new all-time high by 2025 more feasible.
Impact of Tariffs on the Economy
Newly imposed US import tariffs could hurt corporate profits, making it necessary for some companies to reduce their debt, which in turn affects Market liquidity. Generally, when there’s more risk in the Market, Bitcoin can take a hit, especially since it often moves in sync with the S&P 500 index. Axel Merk, an expert in investments, noted that tariffs create a “supply shock.” This means the reduced availability of goods drives prices up, which can contribute to inflation, particularly when interest rates are falling.
If just a small part of the world’s massive bond Market—worth around $140 trillion—seeks better returns elsewhere, this could lead to around $7 trillion being redirected into assets like stocks, commodities, real estate, gold, and Bitcoin.
US Dollar Weakness and Gold’s Rise
Gold recently reached a Market cap of $21 trillion, hitting new all-time highs. As the yellow metal becomes increasingly more appealing, this can result in previously unprofitable mining operations starting up again, and additional investments in mining and refining could follow.
On top of this, the US dollar has been losing value against foreign currencies, according to the DXY Index, which recently hit its lowest mark in six months. A declining US dollar gives more nations a reason to consider alternative forms of value, such as Bitcoin. This shift won’t happen overnight, but the ongoing trade war might encourage countries to reduce their reliance on the dollar. While Bitcoin may not replace the dollar or dominate national reserves, it strengthens its position as a valuable alternative asset.
Investor Considerations
Countries like Japan, China, Hong Kong, and Singapore together hold a staggering $2.63 trillion in US Treasuries. If these nations choose to respond to the US tariffs, bond yields could rise again, increasing the cost of future US debt and further weakening the dollar. Investors may then prefer rare alternative assets like Bitcoin instead of stocks.
While predicting the exact bottom of Bitcoin’s Market can be challenging, the fact that it held strong at the $82,000 support level despite troubling global economic conditions is a positive indicator of its resilience.
This article is for informational purposes only and does not serve as investment advice. The views expressed here are solely those of the author and do not necessarily reflect the opinions of any organization.
Relevant tags: Bitcoin, US Treasuries, Economic Tariffs, Global Trade War, Dollar Weakness, Gold Price, Investment Insights, Market Trends
FAQ about Buying Bitcoin When 10-Year Treasury Yield Falls to 4%
What does it mean when the 10-year Treasury yield falls to 4%?
When the 10-year Treasury yield falls to 4%, it means investors expect lower interest rates or a weaker economy. This can impact other markets, including cryptocurrencies like Bitcoin.
Why is the DXY weakening important for Bitcoin?
DXY, or the U.S. Dollar Index, shows how the dollar is performing compared to other currencies. When DXY weakens, it can make Bitcoin more attractive as an alternative investment, leading to potential price increases.
Should I buy Bitcoin when prices dip?
Buying Bitcoin during a dip can be a good strategy if you believe in its long-term growth. However, it’s important to do your research and consider your financial goals before investing.
Is the Bitcoin price likely to rise now?
While it’s hard to predict, a falling Treasury yield and softening DXY can create a more favorable environment for Bitcoin. However, prices can be volatile, so caution is advised.
What risks should I consider before buying Bitcoin now?
Bitcoin can be risky due to its price swings and Market uncertainty. Always consider your risk tolerance and invest only what you can afford to lose.
