Macro Tug-of-War: Falling Treasury Yields vs Oil Rally Caps Bitcoin Upside

Bitcoin is under mixed sentiment as Jerome Powell’s comments come alongside rising oil prices.

Speaking at Harvard, Powell noted that inflation expectations in the U.S. remain “well-anchored.” After his speech, U.S. Treasury yields dropped sharply, with the 10-year yield falling to 4.35% and the 2-year to 3.83%. At the same time, the chance of another rate hike quickly fell from 25% to just 5%.

Powell emphasized that the Federal Reserve is less concerned about short-term spikes in oil prices but is carefully monitoring inflation expectations. He also mentioned that previous stimulus efforts helped the economy without clear signs they raised inflation. For now, the Fed is taking a wait-and-see approach to the economy before making major policy changes.

Lower bond yields often boost risk assets like Bitcoin by lowering their opportunity cost. However, Bitcoin couldn’t hold onto its gains and slipped back to around $66,500.

Meanwhile, oil prices have climbed sharply. West Texas Intermediate crude rose more than 5% to $104.80, breaking the $100 mark for the first time since 2022. This jump is linked to increasing tensions between the U.S. and Iran, raising worries about possible supply disruptions.

Higher oil prices could push inflation higher again, which might delay any interest rate cuts. This adds uncertainty to the market. While the Fed signals a stable policy outlook, growing energy costs complicate the overall picture.

At its March meeting, the Fed held interest rates steady at 3.5–3.75% and currently expects only one rate cut before the year ends.

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