Bitcoin climbed 43% in the third quarter of 2024 even as the 10-year US Treasury yield surged to 5.34% on October 1, its highest level since 2002. The 90 basis point quarterly rise in yields marked the largest increase this century, yet institutional demand for spot Bitcoin ETFs offset the headwind of higher borrowing costs.
US-traded spot Bitcoin ETFs absorbed $6.3 billion in inflows during Q3, while Ethereum ETFs drew $3 billion. The gains came despite acute volatility tied to economic data. On September 23, stronger-than-expected purchasing manager indices pushed yields higher and Bitcoin briefly slipped below $85,000. That same day, $135.8 million in long positions liquidated in a single hour, with total 24-hour liquidations reaching $510 million.
The yield shock reverberated across markets. The 30-year Treasury yield climbed to 5.64%, while UK 30-year borrowing costs hit 6% for the first time since 1998. Bond yields rose across the US, France, Germany, and Japan. Brent crude oil moved back above $100 per barrel.
Higher rates compressed leverage in crypto markets. On September 25, open interest on selected exchanges fell 14.3%. Forced liquidations from the energy shock totaled $568 million. Yet despite the rate environment, Ethereum gained 71% in Q3, the largest quarterly advance tracked
DeFi Yields Under Pressure
The rise in Treasury yields has reframed the economics of decentralized finance. In the zero-rate era, crypto yields of 4% to 5% appeared attractive against near-zero cash returns. At a 5% risk-free rate, DeFi protocols must now compensate borrowers and depositors for smart contract, liquidity, counterparty, stablecoin, oracle, and governance risk on top of Treasury returns.
A 2026 Finance Research Letters study using Aave data found stablecoin borrowing and deposit rates linked to US Treasury yields. An ECB working paper on Aave found that restrictive monetary shocks reduce both stablecoin borrowing demand and liquidity supply on the protocol.
Bitcoin Treasury Companies and Financing Costs
Bitcoin treasury companies, which fund purchases through common equity, preferred stock, and convertible debt, face higher capital costs. Many now trade at or below net asset value. Citi raised its 12-month Bitcoin price forecast to $113,000 from a prior $82,000, citing institutional adoption and ETF demand as drivers.
Tokenization and Treasury Holdings
The San Francisco Federal Reserve estimated that stablecoin issuers could hold $400 billion in US Treasury securities by 2030. As of the article’s writing, 108 tokenized US Treasury fund products were listed on RWA.xyz. Citi projected the tokenization market could reach $5.5 trillion to $8.2 trillion by 2030.
The Federal Reserve’s H.15 release on October 1 reported the 10-year yield at 5.29%, with the real yield (adjusted for inflation expectations) at 2.93%.
