Bitcoin and Ethereum typically win when real rates are negative. At +2-3% real rates, bonds become a credible alternative. Capital that once flowed to crypto for inflation protection is moving to Treasuries.
Retail and institutional investors are spooked. When bonds offer 5% safety, even institutional buyers hold off on crypto positions until clearer risk/reward emerges.
High rates are already damaging growth sectors. If this persists, earnings will follow, validating the yield spike and keeping risk appetite suppressed for weeks.
If the Fed hints at rate cuts or pauses, yields collapse and crypto rallies. If inflation stays sticky, yields stay elevated and crypto languishes. The critical catalyst is coming soon.
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