According to The Kobeissi Letter, the US 5-Year to 30-Year bond spread has steepened to 1.00% for the first time since October 2021, signaling that markets are pricing in stronger economic growth, higher inflation, and expectations for a 'higher for longer' interest rate policy (source: @KobeissiLetter, May 22, 2025). For cryptocurrency traders, this yield curve steepening typically increases volatility across risk assets, as higher yields can pressure valuations and liquidity. In previous cycles, such macro shifts have influenced Bitcoin and altcoin price action, often leading to short-term corrections but also setting up potential long-term buying opportunities as traditional markets adjust to new monetary policy expectations.

According to The Kobeissi Letter, the US 2-Year Treasury Note yield has climbed above 4.00% after market close, signaling a significant shift in risk-free interest rates (source: The Kobeissi Letter, Twitter, May 21, 2025). This development elevates the risk-free rate, which directly impacts investor appetite for both equities and cryptocurrencies. Historically, higher Treasury yields attract capital away from risk assets like Bitcoin and altcoins, as investors seek safe, stable returns. Traders should closely monitor bond yields, as sustained rates above 4% may trigger increased volatility and downward pressure in crypto prices due to tightening liquidity conditions and more attractive fixed-income alternatives.

According to The Kobeissi Letter, US equity markets are responding to rising yields for the first time since April 9th, with the 10-year Treasury yield now exceeding 4.50%, over 80 basis points higher than pre-Fed Pivot levels (source: The Kobeissi Letter, Twitter, May 21, 2025). This surge has pushed mortgage rates above 7%, auto loans over 10%, and credit card rates beyond 20%. The tightening financial conditions are increasing risk-off sentiment, which historically leads to outflows from both equities and risk assets like cryptocurrencies. Crypto traders should monitor liquidity risks and potential volatility as higher yields and borrowing costs may trigger further downside across risk-on markets.