Treasury Yields Plummet as Markets Decline, Raising Hopes for Crypto Upside

Treasury Yields Plunge as Trump Administration Signals Rate Cuts, Crypto Markets Watch Closely

With financial markets under pressure from trade tensions and economic uncertainty, U.S. Treasury Secretary Scott Bessent reaffirmed Tuesday that the Trump administration is focused on lowering interest rates to support growth.

The crypto market, already reeling from a sharp sell-off in speculative assets like memecoins, is now contending with broader risk-off sentiment from traditional markets. Equities have been sliding for weeks, and the latest round of U.S. tariffs—25% levies on imports from Mexico and Canada, plus new taxes on Chinese goods—has only added to the uncertainty.

The Nasdaq, down 2.6% on Monday, extended losses Tuesday and is now trading below its pre-election levels from last November.

Bond Yields Drop, Rate Cut Bets Climb

In an interview with Fox News, Bessent made the administration’s stance clear: “We’re set on bringing interest rates down.” His remarks come as bond yields have been plunging. The 10-year Treasury yield currently sits at 4.13%, down sharply from 4.80% just six weeks ago when Trump was inaugurated.

Traders are increasingly betting on a shift in Federal Reserve policy. The CME FedWatch Tool now shows a 47% probability of at least one rate cut by May, up from 26% last week. The odds of two or more cuts by June have jumped to 36% from 15%.

Crypto Seeks Relief, but Inflation Looms

While lower interest rates could provide support for risk assets like crypto, inflation remains a major hurdle. The latest data shows inflation at 3% year-over-year, marking four straight months of increases. The last time the Fed met its 2% target was back in February 2021.

With markets closely watching the Fed’s next move, investors must weigh the potential for lower rates against the risk of prolonged inflation. For now, crypto markets remain in limbo, awaiting a clearer policy signal.