Crypto markets had been on a good bullish run in the last quarter of 2024, but the trend of rising government bond yields around the world seems to have become too strong to ignore.
Considered the benchmark that sets the standard around the world, the 10-year US Treasury yield has risen as high as 4.70% through Wednesday, approaching a multi-year high and now up over 100 basis points since the Federal Reserve first cut its Fed funds rate in September.
Action in the UK has been even more extreme, with the 30-year Gilt yield rising to 5.35% on Wednesday, its highest level since 1998. It is now 105 basis points ahead since the first rate cut. the Federal Reserve in September.
Large increases in interest rates are not limited to the United States and the United Kingdom, as Germany, Italy and Japan (to name three) have seen similar actions. In fact, Japan’s 10-year JGB yield has risen to 1.18%, a relatively small figure, but its highest level in almost 15 years.
Rising yields over much of the past few months did not appear to impede cryptocurrency price action, with bitcoin and a host of other digital assets hitting all-time or multi-year highs in early and mid-December. The price development since then is a different story: bitcoin, for example, has fallen more than 10% from its record of more than $108,000 set just three weeks ago and several other major companies have fallen by even greater amounts.
There is always an exception and this time it is China, where yields are falling sharply on concerns about deflation. According to an X post from The Kobeissi Letter, China has been experiencing its longest period of deflation since 1999.
