Global yield increase weighing heavily on cryptocurrency prices.

Cryptocurrency markets had a strong run in the final quarter of 2024, largely unaffected by the global rise in interest rates, but that may be changing as bond yields continue their upward trajectory.

In the past few months, crypto assets have rallied, with Bitcoin and other digital currencies hitting multi-year or record highs. However, the global surge in government bond yields now seems to be having an impact.

The U.S. 10-year Treasury yield, a crucial benchmark for financial markets worldwide, reached 4.70% on Wednesday, approaching its highest level in several years. This marks an increase of over 100 basis points since the Federal Reserve began cutting rates in September. Meanwhile, in the U.K., the 30-year Gilt yield surged to 5.35%, its highest since 1998, and has risen by 105 basis points since the Fed’s initial rate cut.

Other major economies, including Germany, Italy, and Japan, have also seen similar upward movement in bond yields. Japan’s 10-year JGB yield, although relatively modest at 1.18%, is at its highest level in nearly 15 years.

Despite this global trend, crypto prices initially remained resilient, with Bitcoin and several altcoins continuing their bullish run into mid-December. However, the situation has changed in recent weeks, with Bitcoin falling more than 10% from its peak of over $108,000, and other major cryptocurrencies facing even steeper losses.

One exception to this pattern is China, where bond yields are declining amid growing deflation concerns. According to reports from The Kobeissi Letter, China is currently in its longest deflationary period since 1999, which has contributed to falling yields in the country.