The U.S. inflation-indexed bond yield has surged by 100 basis points (bps) since early August, causing renewed jitters in risky assets, including cryptocurrencies. And to the dismay of bitcoin (BTC) bulls, the so-called real yield is likely to rise even further in the coming months.
- On Friday, Goldman Sachs (GS) said 10-year U.S. Treasury inflation-protected securities (TIPS), which are adjusted periodically to compensate for increases in the consumer price index, could rise to 1.25% by the year end and eventually peak somewhere at between 1.25% and 1.5%.
- The real yield stood at 1.02% at press time, the highest since November 2018, according to data from charting platform TradingView.
- Bitcoin has historically moved in the opposite direction to the real yield.
- The 90-day correlation coefficient between the two reached a record -0.95 at the end of June.
- The negative correlation weakened somewhat to -0.65 in recent weeks as the Merge overshadowed macroeconomic factors.
- With the Ethereum blockchain's long-pending software upgrade out of the way, however, bitcoin's and the broader crypto market's negative correlation with real yields could strengthen again.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.