CC Look at the world | From interest rates to currency price: How does US debt affect the lifeblood of Bitcoin?

In the first half of 2025, the US Treasury bond market experienced severe fluctuations. Credit ratings have been downgraded, auctions have been cold, and fiscal deficits have reached new highs ... These events not only reshape the global asset allocation pattern, but also make the relationship between " US bonds and Bitcoin " a new focus of the crypto market. Bitcoin, the once " speculative asset " , is now increasingly regarded as " digital gold " . However, whether this attribute is true depends on whether it can show stability and risk aversion functions when global liquidity is tight. As the anchor of liquidity, the impact of U.S. bonds and interest rate policies on Bitcoin are becoming unprecedentedly significant.

This issue of CC looks at the world and will lead readers to review the important recent events and impacts of US Treasury bonds, and discuss with investors the possibility of future US Treasury bonds and Bitcoin price trends.

What is U.S. debt ?

U.S. Treasury bonds are debt instruments issued by the federal government to make up for fiscal deficits and are known as the " world's safest asset . " Since the US dollar is the world's reserve currency, U.S. bonds naturally have a wide range of international buyers, and yields are often used as an important reference for global asset pricing. Changes in treasury bond yields often reflect market expectations for macro factors such as inflation, interest rate policies, and government credit. As the basis of risk-free interest rates, changes in US bonds will affect capital costs, asset pricing and even global capital flows through multiple channels.

What is a "healthy US debt"?

From the perspective of yield level : The 10 -year U.S. Treasury yield is usually regarded as the anchor of global risk-free interest rates, and a reasonable yield level should reflect the balance between economic growth and inflation. Generally speaking, 2.5% to 3.5% are considered a relatively " healthy " range: this level is enough to provide compensation for future inflation, and it does not increase financing costs and suppress investment and consumption. When the yield is too low (such as <2% ), it often means that the market expects an economic downturn or there is systemic risk; while when the yield continues to be higher than 4.5% , it usually means that inflationary pressure or fiscal credit is questioned, which may cause shocks in the global capital market. Therefore, maintaining a neutral and upper-middle interest rate level will help stabilize global investors' confidence in the US economy.

From the perspective of the yield curve : the pattern of the yield curve (i.e. the relationship between short-term and long-term interest rates) can better reveal the market's expectations for the future economic cycle. Under normal circumstances, long-term interest rates are higher than short-term interest rates, reflecting a moderate upward trend in future economic growth and inflation, which is a " healthy curve " ; and when short-term interest rates are higher than long-term interest rates, the curve is " inverted " , which is usually regarded as a precursor to economic recession. Every curve has been inverted over the past few decades with an economic slowdown or recession. If the current 10 -year interest rate is in a healthy range, but the curve is still inverted, it means that the market is worried about short-term policy tightening and lacks confidence in long-term growth. Therefore, evaluating the " healthy " of US bonds should not only depend on the interest rate, but also on whether its structural logic is reasonable.

What are the core changes in US debt in 2025 ?

1. Debt ceiling and fiscal deficit : At the beginning of 2025, the US government reset the debt ceiling to $36.1 trillion and passed the "Big Beauty Act" again increased in May. Although the risk of default was avoided, the fiscal deficit further expanded, causing widespread doubts among investors about the sustainability of debt.

2. Credit rating downgrade : Moody's downgrades the US sovereign rating from " Aaa " to " Aa1 " for the first time on May 16. This is the first time that the three major rating agencies collectively downgraded the US rating, marking a change in the market's perception of the security of US debt.

3. Slim auctions and rising yields : The results of US bond auctions in May "cooled" many times , and the market demanded higher interest rates before it was willing to take over. This directly pushes up government financing costs and squeezes the attractiveness of other assets.

4. Overseas funds reduced their holdings : At the end of March 2025 , China's U.S. bonds held by China fell to US$765.4 billion, a record low in years. Japan and the UK are also reducing their holdings. This may weaken the demand support for U.S. bonds and make the market more dependent on local funds.

5. Game of inflation and monetary policy : Although the US GDP recorded -0.3% in the first quarter and economic downward expectations have increased, high inflation has not been fundamentally resolved. Whether the Fed cuts interest rates has become the biggest suspense in the market in the next two months.

Impact of US Treasury on global liquidity and risky assets

As the benchmark for global risk-free interest rates, U.S. Treasury bonds directly affect global capital costs. Normally, as shown in the figure below, when the supply of US bonds increases and yields rise, global capital is more inclined to flow to low-risk assets such as US bonds, resulting in tightening of liquidity in other markets. The reduction in liquidity has put pressure on funds for high-risk assets (such as cryptocurrencies, technology stocks, startup investments, etc.) and their performance has weakened; on the contrary, if the U.S. Treasury interest rate falls or the market expects the Federal Reserve to relax its policies, it can release global liquidity and drive the venture capital market to recover. Therefore, US debt determines the direction of global liquidity and is also becoming an important weather vane for the risky asset market.

The impact of US bonds on Bitcoin price

Due to the high linkage between global liquidity and Bitcoin price, the core lies in the market's dynamic judgment of " capital cost " and " risk preference ":

• If the current economic data is manifested as strong employment and high inflation , the market will expect the Federal Reserve to maintain high interest rates to suppress inflation, resulting in rising Treasury yields and rising capital costs, which will eventually lead to an unfavorable situation of tightening liquidity, which will constitute a negative for Bitcoin.
• When the interest rate level itself is already high , the market risk appetite declines, and capital flows back to the bond market, further compressing and enhancing the activity of the crypto market, which poses a negative impact on Bitcoin. However, when risk events occur frequently or doubts about sovereign credit rise, Bitcoin sometimes strengthens in the short term because its " digital gold " risk aversion positioning is supported.
• On the contrary, if the market bets on the advance interest rate cut , it means that liquidity will be released in the future, US Treasury yields will become lower, financing costs will be reduced, risky assets will benefit as a whole, and Bitcoin will often rise accordingly.

However, it should be noted that the uncertainty of the Fed's policy statement often causes violent fluctuations in market sentiment, causing Bitcoin to react beyond expectations in the short term. Therefore, the logic of Bitcoin price is not simply one-way correlation with interest rates, but is nested in the complex chain of " macro expectations change → liquidity judgment → capital behavior " .