Bitcoin’s Best Quarter Since 2017 Faces Challenges from High Treasury Yields
Bitcoin rally meets competition from government bonds
Bitcoin recorded a 43% gain in the third quarter of 2026, marking its best performance for that period since 2017. However, maintaining this growth may be difficult because U.S. Treasury yields have risen above 5%. Treasury yields are the interest rates the government pays to people who lend it money by buying bonds.
When these government bonds offer high returns with very low risk, investors often find them more attractive than riskier assets like Bitcoin. This shift forces Bitcoin and other digital assets to offer even better potential returns to attract investment capital.
Key numbers from the third quarter
- Bitcoin price grew by 43% during the third quarter of 2026.
- The price briefly rose above $87,000 last week before a minor decline.
- U.S. government bond yields have reached multi-decade highs of over 5%.
- The U.S. economy added only 29,000 jobs in September, missing the forecast of 80,000.
U.S. labor data and Federal Reserve outlook
Recent data from the Bureau of Labor Statistics shows that the U.S. job market is cooling. The low number of jobs added in September suggests the economy is slowing down, which often influences how the Federal Reserve manages interest rates. Higher interest rates are typically used to fight inflation but can make borrowing more expensive and slow down investment in crypto.
Federal Reserve officials have indicated they are not in a rush to raise rates again. John Williams, President of the New York Federal Reserve, stated that there is no urgency for further hikes following the central bank's actions in September. This change in outlook has led market participants to lower the odds of a rate increase in October.
Why the debasement trade remains relevant
Despite high interest rates, some investors are continuing to buy Bitcoin as part of a debasement trade. This is a strategy where people buy assets that have a limited supply because they believe government spending and debt will reduce the purchasing power of the U.S. dollar.
Vanessa Grellet of Arche Capital noted that this strategy does not strictly require low interest rates. Instead, it is driven by concerns over rising government deficits and the high cost of interest on national debt. Bitcoin is seen by some as a way to protect wealth if the value of traditional currency declines.
Confirmed facts about the market
It is confirmed that Bitcoin has seen three consecutive weeks of gains leading into October. It is also confirmed that the U.S. Treasury has tripled its buybacks of long-term debt to help provide liquidity to the bond market. Liquidity refers to how easily an asset can be bought or sold without affecting its price.
The upcoming Federal Reserve meeting
Investors are now focusing on the Federal Reserve's meeting later this month. Data from the CME Group’s FedWatch Tool shows that the chance of an interest rate hike in October has dropped significantly. The probability is currently estimated at 24%, down from 75% just one week ago. This shift is largely attributed to the weaker-than-expected employment numbers.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.