The 10-year/2-year Treasury spread narrows to its tightest level since April 2025, signaling prolonged higher interest rates.
The U.S. Treasury yield curve has flattened sharply, with the 10-year/2-year spread narrowing to just 28 basis points, its tightest level since April 2025. This move reflects growing market expectations of a more hawkish Federal Reserve stance, reducing near-term prospects for risk assets like bitcoin.
The Fed’s latest projections indicate policy rates will remain elevated through 2028, making fixed-income investments more attractive compared to non-yielding assets. Historically, a flattening yield curve has signaled tighter monetary policy, weighing on speculative assets.
Higher-for-longer interest rates diminish the appeal of bitcoin and other risk assets, as investors shift toward yield-bearing alternatives. The bond market’s signal suggests limited upside for bitcoin bulls in the near term.