5% 30-year Treasury Yields Pressure Bitcoin

On May 20 the 30-year U.S. Treasury yield reached 5.18%. At the same time Bitcoin traded below $80,000. U.S. spot Bitcoin ETFs recorded roughly 14,000 BTC in weekly outflows and tokenized U.S. Treasuries on-chain reached $15.35 billion.

The long end of the curve began repricing after a $25 billion 30-year auction on May 13 was awarded at 5.046%, the first time the rate exceeded 5% since 2007. Traders pointed to higher energy prices tied to the Iran war, with West Texas Intermediate crude above $106 per barrel and Brent near $114, and to weaker foreign demand for Treasuries. Market participants also cited the large volume of new Treasury issuance.

The Office of Management and Budget projects a $2.06 trillion deficit for fiscal 2026. The Treasury paid nearly $530 billion in interest from October 2025 through March 2026, about $88 billion per month, roughly equal to combined spending on the Department of Defense and the Department of Education. Interest costs rose 6.1% year over year through the sixth month of FY2026. The Congressional Budget Office projects net interest payments will increase from about $1 trillion in 2026 to $2.1 trillion by 2036. The Treasury’s quarterly borrowing schedule lists $189 billion expected in the second quarter and $671 billion in the third.

Futures markets assign more than a 44% probability of a Federal Reserve rate increase by December, and some banks have pushed expected first cuts into 2027. For institutional investors, a roughly 5% yield on a guaranteed 30-year Treasury changes the relative return of holding a non-yielding asset such as Bitcoin. After the higher-than-expected auction, U.S. spot Bitcoin ETFs posted cumulative outflows of about 14,000 BTC, ending a six-week inflow streak. Weekly spot net-volume for Bitcoin-based trades fell on major venues, with Binance dropping from roughly $50 million to $6.5 million and Coinbase from about $30 million to $5.7 million.

Tokenized U.S. Treasuries on-chain reached a market value of $15.35 billion, up about 70% year-to-date. That product allows investors to combine crypto infrastructure with exposure to U.S. government debt.

A large purchaser that funds Bitcoin purchases by issuing equity and preferred stock faces higher funding costs as yields rise. JPMorgan estimated such a purchaser could buy roughly $30 billion in Bitcoin through 2026 at current pacing; higher borrowing costs would reduce that capacity.

Federal deficits are projected to rise from about 5.8% of GDP in 2026 to 6.7% in 2036. Market participants expect the path of U.S. yields and global demand for Treasury debt to influence institutional flows into crypto in the coming months.