Crypto analyst Benjamin Cowen forecasts that the 10-year US Treasury yield will peak between late October and mid-November, potentially easing macroeconomic pressure on Bitcoin (BTC) after yields hit 5.342% on October 1, their highest level since early 2002.
Key Takeaways
- The 10-year Treasury yield reached 5.342% on October 1, marking its highest point since early 2002.
- Market expectation for a Federal Reserve interest rate hike at the October 28 meeting fell from 64% to 17.7% within a single week.
- September payrolls showed just 29,000 new jobs, causing $27.5 million in short seller liquidations within one hour, according to CoinGlass data.
Historical Yield Cycles and Fed Expectations
Cowen notes that historical data from previous midterm election cycles in 2018 and 2022 shows 10-year Treasury yields topping out between early October and mid-November before declining through December. Although Cowen originally identified 5% as a soft target for the yield top, recent market momentum pushed rates higher, leaving a range between 5.4% and 5.6% as a plausible ceiling.
According to Cowen, peak market anxiety will likely cluster around the Federal Reserve meeting on October 28. Bond traders have pushed yields higher out of concern that the central bank may tighten monetary policy too slowly. However, cooling economic metrics—highlighted by September's weak employment figures of 29,000 new jobs—provide fundamental justification for the Fed to pause additional rate increases alongside broader shifts in the Fed rate outlook and recent revisions in official payrolls data.
Impact on Bitcoin and Long-Term Rate Outlook
While Cowen emphasized that his analysis applies to risk assets broadly rather than Bitcoin exclusively, digital asset markets remain sensitive to Treasury yields. Immediately following the weak September jobs report, BTC posted rapid gains, forcing derivative traders into liquidation as $27.5 million in short positions were closed out in 60 minutes, per CoinGlass metrics.
Despite potential near-term relief after the midterm elections, Cowen warned that structural forces could push long-term interest rates higher over the next 10 to 20 years. Persistent elevated yields across multi-year horizons may continue to present structural headwinds for non-yielding assets, including Bitcoin.
Why It Matters
A cyclical top in Treasury yields removes one of the most aggressive macro headwinds that has restricted crypto market liquidity throughout recent quarters. If benchmark yields retreat through December as Cowen projects, capital allocation toward non-yielding stores of value like Bitcoin could rebound sharply in the final quarter of the year. However, investors should monitor incoming inflation metrics closely, as any sudden surge in inflation could force one final bond selloff before yields stabilize.
