What It Means for Bitcoin and Crypto

U.S. Treasury Secretary Scott Bessent has recently stoked excitement in the Bitcoin and crypto community.

Speaking to Fox News on Tuesday, March 4, ahead of President Donald Trump’s Congressional address, Bessent stressed that the administration is focused on bolstering the economy through various means, including “bringing interest rates down.”

The statement has sparked excitement as lower interest rates have become synonymous with rising Bitcoin and crypto asset prices. This is because lower borrowing costs typically lead to improved liquidity and appetite for risk, leading to more capital flows to crypto.

The 2021 bull market has largely been attributed to these low-interest rate conditions, while the 2022 bear market has primarily been attributed to the Federal Reserve’s hawkish shift to rein in inflation.

However, the interest rates referred to by Bessent are not the short-term borrowing costs solely controlled by the Fed. Bessent is referring to the 10-year Treasury yield, which is not just influenced by the Fed but also fiscal policy from the Treasury.

It is equivalent to the government’s borrowing rate and influences things like mortgage rates and corporate borrowing. By trying to bring this rate down, the government aims to reduce the cost of servicing its debts while stimulating economic growth through more affordable business loans and mortgages.

While a reduction in the 10-year yield does not translate to Fed interest rate cuts, it may have similar effects on crypto assets. Specifically, lower yields could make risk assets like Bitcoin and crypto more attractive.

At the time of writing, Bitcoin and the broader crypto market do not appear to have reacted to Bessent’s statements. Bitcoin, for example, is still trading near recent lows at $84,000.