Bitcoin’s price slid on Wednesday, just as U.S. Treasuries surged, with the 10-year yield climbing above 5% and reaching — its highest level since 2007.
The price of the leading cryptocurrency was down 2% over a 24-hour period Wednesday afternoon in New York, and was trading hands for $84,357.
Bitcoin’s price had surged earlier in the week as investors piled into exchange-traded funds. At one point, it soared as high as nearly $87,330.
But its rally has since cooled. It dropped further on Wednesday afternoon around the time the U.S. Treasury said it will purchase up to $6 billion of longer-dated government debt on Thursday.
Bitcoin previously benefited from the Treasury Department’s announcement of buybacks — having its best run in months — but this time dropped.
The 10-year Treasury yield climbed above 5% on Wednesday for the first time in 19 years, after September’s flash PMI data came in well ahead of forecasts and pushed the composite index to a five-year high.
Inflation details added to the pressure: input costs across manufacturing and services rose to their highest level since October 2022, driven largely by fuel and transportation, while wage pressure also strengthened.
Rising yields are typically a headwind for bitcoin’s price. When safe government bonds pay 5%, holding an asset that generates no income becomes more expensive.
Higher rates also tend to strengthen the dollar and dampen appetite for risk-on assets. Bitcoin has repeatedly retreated this year when yields rose on inflation fears, often with ETF outflows and forced selling by leveraged traders amplifying the move.