In May 2025, U.S. Treasury yields are once again in the spotlight. The 10-year yield recently went past 4.5%, reigniting concerns across financial markets. This spike comes on the back of mounting government debt, controversial fiscal proposals, and a historic downgrade of the U.S. credit rating. These events aren’t only headlines for Wall Street—they matter for anyone investing in crypto too. Bitcoin and the broader crypto market tend to react sharply to shifts in interest rates and investor sentiment. That’s why understanding Treasury yields is especially important right now for crypto investors.
U.S. Treasury yields are the interest rates the government pays to borrow money. When you buy a Treasury bond, you’re essentially lending money to the government in exchange for regular interest payments. This return is called the “yield.”
The 10-year Treasury yield is one of the most important indicators in finance. It shows how much return investors expect to earn over 10 years for holding a U.S. government bond. This yield influences many financial rates, including mortgages, student loans, and business borrowing costs.
It’s often called the “risk-free rate” because it’s backed by the full faith of the U.S. government. In simple terms, it’s one of the safest investments available.
Yields and bond prices move in opposite directions. If investors sell bonds, prices drop and yields go up. If investors buy bonds, prices rise and yields fall. So when yields rise, borrowing becomes more expensive. When they fall, borrowing gets cheaper.
Rising Treasury yields affect more than just government borrowing. They ripple across the entire financial system.
1. Higher borrowing costs: When yields go up, borrowing becomes more expensive for everyone. Governments pay more to issue debt, businesses face higher loan rates, and consumers see increased mortgage and car loan costs. This can slow down economic growth.
2. More attractive safe returns: A 5% yield on a government bond is guaranteed and risk-free. That can look very appealing to investors. As a result, they might pull money out of stocks or crypto and put it into bonds instead.
3. Pressure on risk assets: Stocks, real estate, and crypto often suffer when yields rise. For example, in August 2023, a sharp jump in the 10-year yield caused the S&P 500 to drop about 4%. Tech stocks and Bitcoin fell even more. Higher yields can pull money away from these riskier assets.
Bitcoin is considered a “risk asset” by most investors. That means it tends to do well when people are feeling optimistic (“risk-on”) and poorly when investors turn cautious (“risk-off”).
When Treasury yields rise, safer investments become more appealing. Investors often shift away from speculative assets like Bitcoin.
In 2022, as the Federal Reserve raised interest rates to fight inflation, Treasury yields surged. The 10-year yield rose from about 1.5% to over 4%. During that same period, Bitcoin’s price dropped from around $47,000 to $16,000.
However, the connection isn’t always perfect. In 2023, Bitcoin more than doubled in price even as yields climbed. This was largely due to other factors like optimism around Bitcoin ETF approvals and hopes the Fed would pause rate hikes.
The main takeaway is this: sudden spikes in yields can hurt Bitcoin, but other crypto-specific news can sometimes offset that pressure.
As of May 19, 2025, the U.S. 10-year Treasury yield climbed to 4.51%. This jump reflects growing investor concerns about the U.S. government’s finances.
1. Moody’s Downgrade: Moody’s ((a major credit rating agency that evaluates the creditworthiness of governments and companies) downgraded the U.S. credit rating from Aaa to Aa1, citing high deficits and rising debt. This puts Moody’s in line with S&P and Fitch, who had already downgraded the U.S. earlier.
2. New Fiscal Policies: President Trump’s proposed “Big, Beautiful Bill” includes large tax cuts without matching spending cuts. Analysts warn this could add up to $6 trillion to the national debt over the next decade.
3. Investor Reaction: Fearing more debt and inflation, investors are selling Treasury bonds. As bond prices fall, yields rise.
Moody’s is one of the top three credit rating agencies, along with S&P and Fitch. These agencies assign grades to governments and companies to show how likely they are to repay their debts.
A AAA (or Aaa in Moody’s format) rating is the highest possible. It signals extremely low risk.
When Moody’s cuts a rating or gives a “negative outlook,” it’s a warning sign. It suggests the government may become less creditworthy in the future.
In November 2023, Moody’s gave the U.S. a negative outlook for the first time in over a decade.
Then, on May 17, 2025, Moody’s officially downgraded the U.S. from Aaa to Aa1. This ended America’s century-long streak of having a perfect credit rating.
Yes, in a few key ways:
1. Market Sentiment: When credit ratings fall, markets get nervous. Investors tend to pull money from riskier assets. That includes Bitcoin. When Moody’s issued its downgrade in May, Bitcoin and Ethereum both fell by around 3-4%.
2. The Digital Gold Argument: Some crypto believers argue that fiscal instability actually strengthens the case for Bitcoin. Bitcoin has a fixed supply and isn’t tied to any government. If people lose faith in traditional finance, they might turn to Bitcoin as a “safe haven.”
That said, in the short term, credit downgrades usually cause market-wide selloffs, which can hurt Bitcoin too.
For crypto beginners, here’s the simple takeaway:
When Treasury yields go up, it usually signals higher interest rates and tighter financial conditions. This often hurts Bitcoin in the short term.
When yields fall, it can be a sign that the economy is weakening or that the Fed might cut rates. This can boost risk assets like crypto.
Credit rating changes, like the one from Moody’s, are also important. They reflect deeper concerns about government debt and fiscal policy. While these downgrades may cause short-term fear, they also support Bitcoin’s long-term narrative as a decentralized alternative.
Keep an eye on the 10-year yield and what rating agencies are saying. These are powerful indicators of the financial environment—and that environment matters a lot for where Bitcoin might go next.
Anush is a crypto researcher dedicated to making blockchain insights clear and accessible. A proud Solana maxi who still appreciates a good Layer 2 debate, he dives deep into market trends so others don’t have to (but really should). Passionate about simplifying crypto, he strives to make the space less intimidating and a lot more relatable, one report at a time.
