U.S. Bond Warning Puts Bitcoin and Stocks Under Pressure
Bassman's warning about 20-year Treasuries puts higher rates in focus, with possible pressure on risk assets like Bitcoin and growth stocks.
Key Takeaways
- Harley Bassman warns that a 6% 20-year yield could trigger a selloff of about $110 billion in bonds.
- Higher rates could put pressure on stocks and Bitcoin as investors shift faster into safer U.S. government debt.
- Bitcoin traded around $83,014 on Tuesday, while the S&P 500 stayed close to its record.
Wall Street is looking back at the bond market as veteran strategist Harley Bassman warns that a 6% 20-year yield could trigger a selloff worth $110 billion (€98.3 billion) in bonds. According to him, stocks and Bitcoin could feel the impact, because investors would then move faster toward safer U.S. government debt.
Why 6% Is So Sensitive
The 20-year yield was around 5.68% in Bassman's October 13 report, so it was still only 0.32 percentage points below his warning level. According to him, the risk sits in about $200 billion (€179 billion) of Treasury futures. Those contracts give sellers a choice in which bonds they deliver, and when yields rise, longer bonds are often the cheapest option.
That can set off a chain reaction. Managers who want to hedge their risk may then sell more bonds or hedge more aggressively. Bassman said such a shift would be the same as a Treasury auctioning $110 billion (€98.3 billion) in 20-year bonds over four months.
Impact on Stocks and Bitcoin
Higher rates make government bonds more attractive and borrowing more expensive for companies. That can hit growth stocks especially hard, since their valuations are often more sensitive to higher discount rates. Bank of America also pointed to another threshold: a 10-year yield of 5.9% could already push asset managers toward bonds instead of stocks more quickly.
For Bitcoin, the picture is similar, although the reaction is often more volatile. The coin traded around $83,014 (€74,200) on Tuesday and briefly fell below $83,000 (€74,200) before stabilizing again around $84,500 (€75,500). At the same time, the S&P 500 stayed close to its record, showing that stocks are not reacting to the same degree as the bond market yet.
Broader rate expectations also matter. In the debate over the Fed, it was already clear how sensitive markets are to signals about a possible higher rate path.
Why This Matters for Crypto
For European crypto investors, this matters mainly because Bitcoin is increasingly moving with broader risk sentiment. If U.S. rates keep rising, that could temporarily shift investor attention from crypto to government bonds. The Federal Reserve's recent minutes also showed that higher Treasury yields are already firmly on the radar, partly because of inflation expectations and shifts in real rates.
