U.S. Treasury Yield Fall Boosts Crypto Market Inflows

On October 17, the U.S. two-year Treasury yield dropped below 3.44%, the lowest since April, impacting global markets and influencing crypto asset trends.

Lower yields are prompting crypto investment inflows, with Bitcoin reaching historic highs, as investors shift focus amid anticipated Federal Reserve rate changes.

Decline in Treasury Yields Sparks Crypto Investment Surge

The decline in U.S. Treasury yields reflects broader expectations of monetary easing. Market participants are responding to Federal Reserve Chair Jerome Powell’s statements on potential rate cuts. These forecasted adjustments come as the Fed aims for flexibility in balance sheet management. “The Fed remains committed to holding only Treasury securities on its balance sheet for the foreseeable future,” Powell emphasized. Yield reductions, coupled with Powell’s indication of possible future cuts, have created a favorable environment for risk assets such as equities and cryptocurrencies.

As U.S. yields decrease, institutional and retail investors shift towards cryptocurrencies, notably Bitcoin and Ethereum. Increased liquidity in these markets underscores the evolving landscape as traditional financial instruments, like bonds, become less attractive. Paul Mackel from HSBC highlighted that the potential weakening of the U.S. dollar could further reinforce this trend.

Market reactions have been robust, with a notable surge in Bitcoin’s price to an all-time high beyond $125,000, according to J.P. Morgan’s research. This environment of low Treasury yields and a dovish monetary outlook is fostering a bull phase in crypto markets, characterized by enhanced investor confidence and heightened trading volumes.

Bitcoin Surges as Institutional Interest Climbs

Did you know? Previous declines in U.S. Treasury yields have historically been associated with significant rallies in the cryptocurrency market, as lower risk-free rates drive investors toward higher-yielding assets.

As of October 16, 2025, Bitcoin (BTC) trades at $108,587.01 with a market cap of $2.16 trillion, according to CoinMarketCap. The digital asset holds a 58.46% dominance with a circulating supply nearing its 21 million cap. Despite recent dips reflected in a 30-day price change of -6.92%, trading volumes increased by 7.15%, reflecting heightened market activities and investor interest.

Coincu’s research team notes that if the U.S. dollar further weakens amid ongoing geopolitical tensions, cryptocurrencies like Bitcoin could experience sustained growth. Institutional interest is expected to rise as macroeconomic uncertainties and policy shifts increase the allure of digital assets. Moreover, regulatory landscapes continue to adapt, potentially offering new avenues and challenges for digital asset integration into mainstream finance.