Goldman's Bullish Stance on 'Real Bond Yield' Spells Bad News for Crypto

Real yields turned positive early early this year, removing the punch bowl that lubricated the party in risky assets, including cryptocurrencies.

AccessTimeIconSep 19, 2022 at 12:33 p.m. UTC
Updated May 11, 2023 at 4:39 p.m. UTC

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.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.