The U.S. Treasury yield curve has flattened sharply, with the 10-year/2-year spread narrowing to 28 basis points, the tightest since April 2025. This signals a more hawkish Federal Reserve stance, as higher-for-longer interest rate expectations make fixed-income assets more attractive relative to non-yielding risk assets like bitcoin. The Fed's latest projections show policy rates staying higher through 2028, with the median rate for 2026 climbing to 3.8% from 3.4%. This reversal from the start of the year, when the curve was steepening amid hopes of rate cuts, removes a key tailwind for cryptocurrencies. The bond market's signal suggests that bitcoin could remain under pressure, aligning with the four-year halving cycle theory predicting a potential bottom around October 2026.

Key facts

• 10-year/2-year Treasury spread narrows to 28 bps, tightest since April 2025.
• Fed's hawkish pivot signals higher-for-longer interest rates through 2028.
• Flattening yield curve reduces risk appetite for non-yielding assets like bitcoin.
• Fed dot plot shows median rate for 2026 rising to 3.8% from 3.4%.
• Bitcoin may remain under pressure, aligning with halving cycle bottom around Oct 2026.

KeyAudit data perspective