Bitcoin Faces a New Macro Test as Crypto Fund Inflows Slow

TLDR: 

• Digital asset funds attracted $11.1 billion since mid-July, but weekly inflows have slowed.
• The 10-year Treasury yield topped 5.3%, while the 30-year yield reached 5.7%.
• October rate-hike odds fell to 23% from 71% three weeks earlier.
• CoinShares says sustained fund inflows could reveal whether fiscal concerns strengthen Bitcoin demand.

CoinShares says the Bitcoin bond market connection could become more important as digital asset fund inflows lose momentum. The funds attracted approximately $11.1 billion since mid-July, but demand has slowed this week.

Meanwhile, the 10-year U.S. Treasury yield has climbed above 5.3%, while the 30-year yield has reached 5.7%. Both yields are near their highest levels in more than two decades. CoinShares argues that concerns about U.S. fiscal sustainability could eventually influence Bitcoin more than Federal Reserve policy.

Bitcoin Bond Market Signals a Shift Beyond Fed Policy

U.S. government bond yields have continued rising despite Treasury Department efforts to support the market. The department doubled long-term liquidity-support buybacks in August to at least $4 billion per operation. Those measures remain in place through early November, but yields have continued climbing.

The report suggests investors remain concerned about the government’s underlying fiscal position. Treasury Secretary Scott Bessent has acknowledged that the Treasury cannot simply control the bond market. He has also pointed to higher oil prices as a factor behind rising yields.

September was the worst month for U.S. government bonds in four years. During that period, the 10-year Treasury yield increased by more than 50 basis points. Such increases typically pressure Bitcoin by making traditional fixed-income investments more attractive.

However, CoinShares identifies a different possibility. If rising yields reflect concerns about government debt rather than stronger economic growth, investors could reconsider Bitcoin’s role. Instead of treating BTC purely as a risk asset, they might increasingly view it as an alternative to government-issued money.

That distinction matters because the same market movement can carry different implications for cryptocurrency. Yields rising alongside stronger growth can tighten financial conditions and weigh on speculative assets. 

Rising yields driven by fiscal concerns could strengthen the investment argument for assets outside the traditional financial system.

Treasury Yields and Their Growing Influence on Bitcoin

The Federal Reserve faces conflicting signals from employment and inflation. 

September payrolls came in considerably weaker than expected, reducing the market-implied probability of an October rate hike. That probability fell to 23%, down from 71% three weeks earlier.

However, inflation remains a concern for policymakers. Higher energy prices, partly linked to the Iran conflict, continue adding pressure. Meanwhile, purchasing managers’ indexes still indicate economic expansion, and consumer spending has held up relatively well.

These conflicting signals help explain why weaker employment data has not triggered a decisive Bitcoin rally. Investors must weigh softer labor conditions against persistent inflation and resilient economic activity.

For Bitcoin traders, the distinction between monetary policy and bond-market pressure is increasingly important. Lower expectations for rate hikes do not automatically guarantee stronger BTC performance. Rising Treasury yields can still tighten financial conditions, even when markets anticipate a less aggressive Federal Reserve.

Fund flows therefore offer an important signal to monitor. CoinShares reports that digital asset investment products have attracted $11.1 billion since mid-July, although momentum has weakened recently. 

The report attributes earlier demand partly to investors buying at depressed valuations, alongside growing concerns about U.S. fiscal sustainability.

Whether that second factor becomes a stronger investment driver remains uncertain. Sustained inflows would provide evidence that investors are allocating more capital to digital assets despite elevated bond yields.

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