The 10-year US Treasury yield surged 15 basis points to 5.11%, marking a daily close at its highest level since 2007. The rise in sovereign debt yields created a ripple effect, directly hitting investor risk appetite across the digital asset market.
Dogecoin (DOGE) led the selling pressure, dropping between 7% and 8% and dragging its price down to 9 cents. The largest cryptocurrency by market capitalization, Bitcoin, also corrected more than 2% within 24 hours to around $83,900. Other tokens such as ZEC, XRP, and HYPE followed suit with concurrent declines ranging from 5% to 6%.
The crypto market downturn comes just days ahead of Friday’s multi-billion dollar options expiry. Market participants chose to trim exposure as macroeconomic uncertainty heated up.
Impact of Crude Oil Prices
The surge in debt market yields was directly triggered by movements in global energy commodity prices. Brent crude oil rose 4% to approach $104 per barrel. Pressure from the energy sector coincided with stronger US S&P Global composite PMI data, which climbed to 58.4 - its highest reading since July 2021.
Weak Demand for Treasury Auction
Institutional appetite for government debt also appeared to wane. The US Treasury held a $70 billion 5-year note auction that resulted in high borrowing costs for the issuer. The auction closed with a 5.033% yield, the highest level recorded since 2006 due to weak market demand.
The Pull of Traditional Instruments
When sovereign debt instruments offer guaranteed returns above 5%, capital naturally rotates out of higher-risk asset classes that do not provide fixed yields. For crypto traders, the sell-off in meme coins and Bitcoin stalling below $84,000 serve as a stark reminder that digital asset performance remains closely tied to energy-driven inflation and rising bond yields.
Reported via CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
