Bitcoin holds near $91,000 as pending Fed rate cuts and rising Treasury yields heighten market caution

Bitcoin saw a slight increase on Monday, as the market broadly expects the Federal Reserve to cut interest rates by another 25 basis points this week, adjusting the target rate to the 3.5%-3.75% range. However, contrary to the traditional logic of “rate cuts are bullish for risk assets and lower bond yields,” U.S. Treasury yields have continued to rise, making market sentiment more cautious.

Typically, a rate cut means increased liquidity, and cheaper capital tends to boost investment and loan demand, supporting the prices of high-risk assets like Bitcoin, while lowering short-term rates and yields. Data shows that Bitcoin rose more than 1.5% on the day, hovering near $91,800, and has rebounded from the $80,000 area over the past three weeks, forming higher lows and highs.

But the yield on the U.S. 10-year Treasury note climbed against the trend to 4.15%, the highest level since November 20. Yields have risen nearly 20 basis points since last week, sparking concerns about a “hawkish rate cut.” Market participants believe bond traders are pricing in the possibility that Powell may signal caution, unwilling to commit to further easing on the policy path through 2026.

10x Research founder Markus Thielen pointed out that the real risk does not lie in the rate cut itself, but in the language used at the press conference. He believes Powell may hint at a pause in rate cuts, and the crypto market has yet to fully price this in. Greg Magadini of Amberdata added that although recent weak employment and inflation data support a rate cut, the market will focus on whether this cut is dovish or hawkish.

ING analysts noted that divisions within the Federal Reserve are growing over whether inflation or labor market weakness is more critical, and the pace of rate cuts in 2026 may slow. They expect the Fed will not easily send a more dovish signal in its latest forecasts.

STS Digital Asia head Jeff Anderson believes the rise in 10-year yields is in line with recent trends, as the market tends to sell Treasuries when yields approach 4.00%. Additionally, global markets are closely watching changes in Japanese government bond yields, and a possible rate hike in Japan in December could push global yields higher and trigger deleveraging in risk assets.

Meanwhile, the market is also watching whether the Federal Reserve will launch a “Reserve Management Purchase Program” to improve dollar liquidity by buying short-term Treasuries. Some analysts believe such discussions may emerge at this week’s meeting.

Overall, Bitcoin remains on a solid trajectory, but rising Treasury yields, Fed policy tone, and the global interest rate environment could all bring new sources of volatility to the market. (CoinDesk)