5% Treasury Yields Could Push Investors Away From Bitcoin and Gold

Bloomberg Intelligence senior macro strategist Mike McGlone says rising U.S. Treasury yields could give investors a stronger incentive to reduce exposure to Bitcoin and gold as tighter monetary conditions reshape global markets.

McGlone argues that U.S. government bonds yielding around 5% are becoming increasingly attractive compared with alternative assets that generate no interest income. His comments follow the Federal Reserve’s Sept. 16 decision to raise its benchmark interest rate by 25 basis points to a range of 3.75%–4%, as policymakers continue efforts to bring inflation back toward their 2% target.

At the same time, the U.S. 10-year Treasury yield has approached the closely watched 5% level. McGlone believes higher government bond yields could redirect capital away from assets such as Bitcoin and gold, particularly if liquidity remains tight and financial conditions continue to deteriorate.

The Bloomberg strategist also highlighted the ratio between the Bloomberg Commodity Spot Index and long-term bonds. According to his analysis, the ratio has reached extremes not seen since around 1990. Similar historical peaks have been associated with economic downturns and subsequent declines in interest rates.

However, McGlone sees an important difference in the current cycle: rather than easing monetary policy, the Fed has continued tightening. That combination of elevated borrowing costs, high energy prices and restrictive financial conditions could increase pressure on equities and other risk-sensitive assets.

Gold may face competition because it does not provide coupon income, making higher-yielding government debt more attractive to investors seeking returns and capital preservation. Bitcoin could face an additional challenge because it often behaves like a high-risk asset during periods of declining liquidity and market stress.

McGlone’s outlook suggests institutional investors could increasingly rotate toward U.S. Treasuries if yields remain near 5%. Such a shift could weigh on Bitcoin, gold and other assets that benefited heavily from the low-rate and abundant-liquidity environment of previous years.

The broader question for markets is whether elevated Treasury yields mark the final stage of the current tightening cycle or eventually trigger enough economic weakness to force monetary policy in the opposite direction.