Bitcoin shows little consistent link to rising bond yields, CoinDesk data finds

Bitcoin's long-run link to bond yields is close to zero, CoinDesk says

Bitcoin has shown little to no consistent relationship with government bond yields over most of its history, according to an analysis published by CoinDesk. The finding challenges the common view that rising yields are automatically bad for the cryptocurrency.

Yields are the returns investors receive for holding government debt. When yields rise, analysts often argue that the cost of holding assets paying no income, such as bitcoin and gold, goes up, because money could earn more in bonds instead.

Yields moved sharply on Wednesday. The U.S. 10-year Treasury yield rose 15 basis points to above 5.13%, its highest level since 2007, and lifted yields in other countries as well. A basis point is one hundredth of a percentage point.

The correlation numbers behind the claim

• CoinDesk said the 90-day correlation between bitcoin's daily returns and daily moves in the U.S. 10-year yield was minus 0.18, a figure it described as close to zero and almost the same as no relationship at all.
• Over longer periods the reading was minus 0.06 for 180 days and minus 0.03 for one year, CoinDesk said.
• CoinDesk also said bitcoin is equally uncorrelated with the yields of other countries.
• Correlation is a measure of how closely two things move together. A reading near zero points to little clear relationship between them.

What Bitget Wallet's research lead said

Lacie Zhang, research lead at Bitget Wallet, told CoinDesk that bitcoin's near-zero correlation with U.S. Treasury yields is a genuine portfolio advantage, because it suggests bitcoin is not simply trading as a duration or rates asset.

Zhang said recent data put the 90-day correlation between bitcoin's daily returns and the U.S. 10-year yield at around minus 0.17, and that the relationship has at times been even closer to zero. That figure is slightly different from the minus 0.18 reported by CoinDesk for the same window.

Bitcoin's gains while global yields climbed

CoinDesk said bitcoin is up 191% since 2021 and reached a record price of $126,000 last October. Over the same period, 10-year yields climbed more than 500 basis points in the U.K. and France and more than 400 basis points in the U.S., Australia, Germany and Italy, according to the article.

Japanese and Swiss yields rose 296 and 105 basis points respectively, CoinDesk said, while China's yields fell as the country dealt with deflation.

Bond volatility is the short-term risk, the analysis says

Being broadly uncorrelated does not necessarily protect bitcoin from short-term losses, especially when the pressure comes from bond market volatility rather than the level of yields, according to the article.

CoinDesk said a 21% surge in Treasury market volatility helped push bitcoin from $87,200 to $83,500 on Wednesday, and that continued turbulence could trigger further losses. That is a possibility raised by the source, not a confirmed outcome.

Why the low correlation matters for portfolios

CoinDesk said the near-zero relationship can be a benefit, because it means bitcoin can play a role similar to other alternative investments in improving a portfolio's risk-adjusted returns. The article said investment banks have made this argument for years and that crypto analysts say the same.

That is a claim about how portfolios may behave, not a confirmed result of the data itself.

What is confirmed

• CoinDesk published an analysis saying bitcoin has shown little to no consistent correlation with government bond yields over most of its history.
• The U.S. 10-year Treasury yield rose 15 basis points to above 5.13% on Wednesday, its highest since 2007, according to CoinDesk.
• CoinDesk reported 90-day, 180-day and one-year correlation figures of minus 0.18, minus 0.06 and minus 0.03.
• Lacie Zhang of Bitget Wallet gave CoinDesk her view that the low correlation is a portfolio advantage and cited a 90-day figure of around minus 0.17.

What is still unclear

The two 90-day correlation figures differ slightly: minus 0.18 in CoinDesk's analysis and around minus 0.17 in Zhang's comment. Correlation figures describe how two things moved together in the past and do not show what will happen next.

CoinDesk also said continued bond market turbulence could lead to further bitcoin losses, but presented this as a risk rather than a settled outcome.

Sources

• CoinDesk